NRS 682A.005Definitions.As
used in this chapter, unless the context otherwise requires, the words and
terms defined in NRS 682A.007 to 682A.223, inclusive, have the meanings ascribed to
them in those sections.

1. As to securities lending transactions,
and for the purpose of calculating counterparty exposure amount, cash, cash
equivalents, letters of credit, direct obligations of, or securities that are
fully guaranteed as to principal and interest by, the Federal Government or any
agency thereof, or by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation and, as to lending foreign securities, sovereign
debt rated 1 by the SVO;

2. As to repurchase transactions, cash,
cash equivalents and direct obligations of, or securities that are fully
guaranteed as to principal and interest by, the Federal Government or any
agency thereof, or by the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation; and

NRS 682A.009“Acceptable private mortgage insurance” defined.“Acceptable private mortgage insurance” means
insurance written by a private insurer protecting a mortgage lender against
loss occasioned by a mortgage loan default and issued by a licensed mortgage
insurance company with a rating of 1 by the SVO, or a rating issued by a
nationally recognized statistical rating organization equivalent to a rating of
1 by the SVO, that covers losses up to an 80 percent loan-to-value ratio.

NRS 682A.013“Accident and health insurance” defined.“Accident and health insurance” means
protection which provides payment of benefits for covered sickness or accidental
injury. The term does not include credit insurance, disability insurance,
accidental death and dismemberment insurance and long-term care insurance.

NRS 682A.017“Admitted asset” defined.“Admitted
asset” means an asset permitted to be reported as an admitted asset on the
statutory financial statement of the insurer most recently required to be filed
with the Commissioner. The term does not include assets of separate accounts,
the investments of which are not subject to the provisions of this chapter.

NRS 682A.019“Affiliate” defined.“Affiliate”
means, as to any person, another person that, directly or indirectly through
one or more intermediaries, controls, is controlled by or is under common
control with the person.

NRS 682A.023“Asset-backed security” defined.“Asset-backed
security” means a security or other instrument, excluding a mutual fund,
evidencing an interest in, or the right to receive payments from, or payable
from distributions on, an asset, a pool of assets or specifically divisible
cash flows which are legally transferred to a trust, or another special purpose
bankruptcy-remote business entity, which meets the conditions set forth in NRS 682A.245.

NRS 682A.027“Cap” defined.“Cap”
means an agreement obligating the seller to make payments to the buyer, with
each payment based on the amount by which a reference price or level, or the
performance or value of one or more underlying interests, exceeds a
predetermined number, sometimes referred to as the strike rate or strike price.

NRS 682A.029“Capital and surplus” defined.“Capital
and surplus” means the sum of the capital and surplus of the insurer which is
required to be shown on the statutory financial statement of the insurer most
recently required to be filed with the Commissioner.

NRS 682A.033“Cash equivalents” defined.“Cash
equivalents” means short-term, highly rated and highly liquid investments or
securities that are readily convertible to known amounts of cash without
penalty and so near maturity that they present insignificant risk of change in
value. The term includes, without limitation, government money market mutual
funds and class one money market mutual funds. As used in this section:

NRS 682A.035“Class one bond mutual fund” defined.“Class
one bond mutual fund” means a mutual fund that at all times qualifies for
investment using the bond class one reserve factor contained in the Purposes
and Procedures Manual of the SVO.

NRS 682A.037“Class one money market mutual fund” defined.“Class one money market mutual fund” means a
money market mutual fund that at all times qualifies for investment using the
bond class one reserve factor under the Purposes and Procedures Manual
of the SVO.

NRS 682A.045“Construction loan” defined.“Construction
loan” means a loan of less than 3 years in term, made for financing the costs
of construction of a building or other improvement to real estate and that is
secured by the real estate.

NRS 682A.047“Control” defined.“Control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a person, whether through
ownership of voting securities, by contract, other than a commercial contract
for goods or nonmanagement services, or otherwise, unless the power is the
result of an official position with or corporate office held by the person.

NRS 682A.053“Covered” defined.“Covered”
means that an insurer owns or can immediately acquire, through the exercise of
options, warrants or conversion rights already owned, the underlying interest
to fulfill or secure its obligations under a call option, cap or floor it has
written, or has set aside in accordance with a custodial or escrow agreement,
cash or cash equivalents with a market value equal to the amount required to
fulfill its obligations in accordance with a put option it has written, in an
income generation transaction.

NRS 682A.055“Credit tenant loan” defined.“Credit
tenant loan” means a mortgage loan which is made primarily in reliance on the
credit standing of a major tenant, structured with an assignment of the rental
payments to the lender with real estate pledged as collateral in the form of a
first position lien.

1. “Derivative instrument” means an
agreement, option or instrument, or a series or combination thereof:

(a) To make or take delivery of, or assume or
relinquish, a specified amount of one or more underlying interests, or to make
a cash settlement in lieu thereof; or

(b) That has a price, performance, value or cash
flow based primarily upon the actual or expected price, level, performance,
value or cash flow of one or more underlying interests.

2. The term includes, without limitation,
options, warrants used in a hedging transaction and not attached to another
financial instrument, caps, floors, collars, swaps, forwards, futures and any
other agreements, options or instruments substantially similar thereto, or any
series or combination thereof, and any agreements, options or instruments
allowed pursuant to the regulations adopted under NRS
682A.388.

NRS 682A.063“Direct” and “directly” defined.“Direct”
or “directly,” when used in connection with an obligation, means that the
designated obligor is primarily liable on the instrument representing the
obligation.

NRS 682A.065“Dollar roll transaction” defined.“Dollar
roll transaction” means two simultaneous transactions with different settlement
dates, not more than 96 days apart, such that in the transaction with the
earlier settlement date, an insurer sells to a business entity, and in the
other transaction the insurer is obligated to purchase from the same business
entity substantially similar securities of the following types:

1. Asset-backed securities issued, assumed
or guaranteed by the Government National Mortgage Association, the Federal
National Mortgage Association or the Federal Home Loan Mortgage Corporation, or
their respective successors; and

2. Other asset-backed securities referred
to in section 106 of title 1 of the Secondary Mortgage Market Enhancement Act
of 1984, 15 U.S.C. § 77r-1, as amended.

NRS 682A.067“Domestic jurisdiction” defined.“Domestic
jurisdiction” means the United States, Canada, any state of the United States,
any province of Canada or any political subdivision of any of the foregoing.

NRS 682A.075“Floor” defined.“Floor”
means an agreement obligating the seller to make payments to the buyer in which
each payment is based on the amount by which a predetermined number, sometimes
called the floor rate or price, exceeds a reference price, level, performance
or value of one or more underlying interests.

NRS 682A.079“Foreign investment” defined.“Foreign
investment” means an investment in a foreign jurisdiction, or an investment in
a person, real estate or asset domiciled in a foreign jurisdiction, that is
substantially of the same type as those eligible for investment in accordance
with this chapter, other than an investment made in accordance with NRS 682A.440 to 682A.448,
inclusive, and 682A.550 to 682A.558,
inclusive.

NRS 682A.085“Forward” defined.“Forward”
means an agreement, other than a future, to make or take delivery of or effect
a cash settlement based on the actual or expected price, level, performance or
value of one or more underlying interests.

NRS 682A.087“Future” defined.“Future”
means an agreement, traded on a qualified exchange or qualified foreign
exchange, to make or take delivery of, or effect a cash settlement based on the
actual or expected price, level, performance or value of one or more underlying
interests.

2. Corporation, limited-liability company,
association, partnership, joint stock company, joint venture, trust or other
entity or instrumentality organized in accordance with the laws of any domestic
jurisdiction to accomplish a public policy or other governmental purpose.

NRS 682A.095“Guaranteed or insured” defined.“Guaranteed
or insured,” when used in connection with an obligation acquired in accordance
with the provisions of this chapter, means that the guarantor or insurer has
agreed to:

1. Perform or insure the obligation of the
obligor or purchase the obligation; or

2. Be unconditionally obligated until the
obligation is repaid to maintain in the obligor a minimum net worth, fixed
charge coverage, stockholder’s equity or sufficient liquidity to enable the
obligor to pay the obligation in full.

NRS 682A.103“Income” defined.“Income”
means, as to a security, interest, accrual of discount, dividends or other
distributions, including, without limitation, rights, tax or assessment
credits, warrants and distributions in kind.

NRS 682A.115“Investment company series” defined.“Investment
company series” means an investment portfolio of an investment company that is
organized as a series company and to which assets of the investment company
have been specifically allocated.

NRS 682A.123“Investment subsidiary” defined.“Investment
subsidiary” means a subsidiary of an insurer engaged or organized to engage
exclusively in the ownership and management of assets authorized as investments
for the insurer where the subsidiary limits its investment in any asset so that
its investments will not cause the amount of the total investment of the
insurer to exceed any of the investment limitations or avoid any other
provisions of this chapter applicable to the insurer. As used in this section,
“total investment of the insurer” includes:

1. Direct investment by the insurer in an
asset; and

2. The insurer’s proportionate share of an
investment in an asset by an investment subsidiary of the insurer, calculated
by multiplying the amount of the subsidiary’s investment by the percentage of
the insurer’s ownership interest in the subsidiary.

NRS 682A.125“Letter of credit” defined.“Letter
of credit” means a clean, irrevocable and unconditional document that serves as
a guaranty for payments made to a specified person under specified conditions,
issued or confirmed by, and payable and presentable at, a financial institution
on the list of financial institutions meeting the standards for issuing letters
of credit in accordance with the Purposes and Procedures Manual of the
SVO.

NRS 682A.127“Limited-liability company” defined.“Limited-liability
company” means a business organization, excluding partnerships and ordinary
business corporations, that is organized or operating in accordance with the
laws of the United States, or any state thereof, and that limits the personal
liability of investors to the equity investment of the investor in the business
organization.

2. As to a security as of any date, the
price for the security on that date obtained from a generally recognized source
or the most recent quotation from such a source or, to the extent no generally
recognized source exists, the price for the security as determined in good
faith by the parties to a transaction, plus accrued but unpaid income thereon
to the extent not included in the price on that date.

NRS 682A.145“Mutual fund” defined.“Mutual
fund” means an investment company or, in the case of an investment company that
is organized as a series company, an investment company series, that, in either
case, is registered with the United States Securities and Exchange Commission
in accordance with the provisions of the Investment Company Act of 1940, 15
U.S.C. §§ 80a-1 et seq., as amended.

NRS 682A.149“Obligation” defined.“Obligation”
means evidence of indebtedness for the payment of money or other consideration,
whether constituting a general obligation of the issuer or payable only out of
certain revenues or certain funds pledged or otherwise dedicated for payment.
The term includes, without limitation, a bond, note, debenture, trust
certificate, including an equipment certificate, production payment, negotiable
bank certificate of deposit, banker’s acceptance, credit tenant loan or loan
secured by financing net leases.

NRS 682A.153“Option” defined.“Option”
means an agreement giving the buyer the right to buy or receive, sell or
deliver, enter into, extend or terminate, or effect a cash settlement based on
the actual or expected price, level, performance or value of one or more
underlying interests.

NRS 682A.155“Over-the-counter derivative instrument” defined.“Over-the-counter derivative instrument” means
a derivative instrument entered into with a business entity other than through
a qualified exchange or qualified foreign exchange, or cleared through a
qualified clearinghouse.

NRS 682A.157“Person” defined.“Person”
means an individual, a business entity, a multilateral development bank or a
government or quasi-governmental body, including, without limitation, a
political subdivision or a government sponsored enterprise.

NRS 682A.159“Potential exposure” defined.“Potential
exposure” means the amount determined in accordance with the Annual
Statement Instructions for the type of insurer to be reported on as adopted
by the NAIC.

NRS 682A.163“Preferred stock” defined.“Preferred
stock” means the stock of a business entity authorized to issue the stock and
that has a preference in liquidation over the common stock of the business
entity.

1. A national bank, state bank or trust
company that at all times is not less than adequately capitalized as determined
by the standards adopted by United States banking regulators and that is either
regulated by state banking laws or is a member of the Federal Reserve System;
or

2. A bank or trust company incorporated or
organized in accordance with the laws of a country other than the United States
that is regulated as a bank or trust company by that country’s government, or
an agency thereof, and that at all times is not less than adequately
capitalized as determined by the standards adopted by international banking
authorities.

NRS 682A.167“Qualified business entity” defined.“Qualified
business entity” means a business entity that is:

1. An issuer of obligations or preferred
stock that is rated 1 or 2 by the SVO or an issuer of obligations, preferred
stock or derivative instruments that are rated the equivalent of 1 or 2 by the
SVO or by a nationally recognized statistical rating organization recognized by
the SVO; or

2. A primary dealer in United States
government securities, recognized by the Federal Reserve Bank of New York.

NRS 682A.169“Qualified clearinghouse” defined.“Qualified
clearinghouse” means a clearinghouse for, and subject to the rules of, a
qualified exchange or qualified foreign exchange, which provides clearing
services, including acting as a counterparty to each of the parties to a
transaction such that the parties no longer have credit risk as to each other.

NRS 682A.175“Qualified foreign exchange” defined.“Qualified
foreign exchange” means a foreign exchange, board of trade or contract market
located outside the United States, its territories or possessions:

1. That has received regulatory
comparability relief in accordance with Commodity Futures Trading Commission
Rule 30.10, as set forth in 17 C.F.R. Part 30, Appendix C, as amended;

2. That is, or its members are, subject to
the jurisdiction of a foreign futures authority that has received regulatory
comparability relief in accordance with Commodity Futures Trading Commission
Rule 30.10, as set forth in 17 C.F.R. Part 30, Appendix C, as amended, as to
futures transactions in the jurisdiction where the exchange, board of trade or
contract market is located; or

3. Upon which foreign stock index futures
contracts are listed that are the subject of no-action relief issued by the
Commodity Futures Trading Commission’s Office of General Counsel, provided that
an exchange, board of trade or contract market that qualifies as a qualified
foreign exchange only in accordance with this section is a qualified foreign
exchange as to foreign stock index futures contracts that are the subject of
no-action relief.

1. “Rated credit instrument” means a
contractual right to receive cash or another rated credit instrument from
another entity which instrument:

(a) Is rated or required to be rated by the SVO;

(b) In the case of an instrument with a maturity
of 397 days or less, is issued, guaranteed or insured by an entity that is
rated by, or another obligation of such entity is rated by, the SVO or by a
nationally recognized statistical rating organization recognized by the SVO;

(c) In the case of an instrument with a maturity
of 90 days or less, is issued by a qualified bank;

(d) Is a share of a class one bond mutual fund;
or

(e) Is a share of a money market mutual fund.

2. The term does not include:

(a) An instrument that is mandatorily, or at the
option of the issuer, convertible to an equity interest; or

(b) A security that has a par value and whose
terms provide that the issuer’s net obligation to repay all or part of the
security’s par value is determined by reference to the performance of an
equity, a commodity, a foreign currency or an index of equities, commodities,
foreign currencies, or any combination thereof.

(b) Interests in real property, including,
without limitation, leaseholds, minerals and oil and gas that have not been
separated from the underlying fee interest;

(c) Improvements and fixtures located on or in
real property; and

(d) The seller’s equity in a contract providing
for a deed of real estate.

2. As to a mortgage on real estate, the
term includes the leasehold estate only if it has an unexpired term, including,
without limitation, renewal options exercisable at the option of the lessee,
extending beyond the scheduled maturity date of the obligation that is secured
by a mortgage on the leasehold estate for the greater of:

(a) A period equal to at least 20 percent of the
original term of the obligation; or

NRS 682A.183“Replication transaction” defined.“Replication
transaction” means a derivative transaction that is intended to replicate the
performance of one or more assets which an insurer is authorized to acquire in
accordance with the provisions of this chapter. The term does not include a
derivative transaction that is entered into as a hedging transaction.

NRS 682A.185“Repurchase transaction” defined.“Repurchase
transaction” means a transaction in which an insurer purchases securities from
a business entity that is obligated to repurchase the purchased securities, or
equivalent securities, from the insurer at a specified price, either within a
specified period of time or upon demand.

NRS 682A.187“Required liabilities” defined.“Required
liabilities” means the total liabilities required to be reported on the
statutory financial statement of the insurer most recently required to be filed
with the Commissioner.

NRS 682A.189“Residential mortgage loan” defined.“Residential
mortgage loan” means a mortgage loan primarily secured by real estate which is
improved with at least one but not more than four residential dwelling units.

NRS 682A.193“Reverse repurchase transaction” defined.“Reverse repurchase transaction” means a
transaction in which an insurer sells securities to a business entity and is
obligated to repurchase the sold securities, or equivalent securities, from the
business entity at a specified price, either within a specified period of time
or on demand.

NRS 682A.197“Securities lending transaction” defined.“Securities lending transaction” means a
transaction in which securities are loaned by an insurer to a business entity
that is obligated to return the loaned securities, or equivalent securities, to
the insurer, either within a specified period of time or upon demand.

1. Is subject to a mandatory sinking fund
or similar arrangement that will provide for the redemption or open market
purchase of the entire issue over a period not greater than 40 years after the
date of acquisition; and

2. Provides for mandatory sinking fund
installments or open market purchases commencing not more than 10.5 years after
the date of issue, with the sinking fund installments providing for the
purchase or redemption, on a cumulative basis commencing 10 years after the
date of issue, of at least 2.5 percent per year of the original number of
shares of that issue of preferred stock.

NRS 682A.209“Substantially similar securities” defined.“Substantially similar securities” means
securities that meet all criteria for “substantially similar” specified in the Accounting
Practices and Procedures Manual adopted by the NAIC, as amended, and in an
amount that constitutes good delivery form as determined from time to time by
the Public Securities Administration, or its successor organization.

NRS 682A.215“Swap” defined.“Swap”
means an agreement to exchange or to net payments at one or more times based on
the actual or expected price, level, performance or value of one or more
underlying interests.

NRS 682A.217“Underlying interest” defined.“Underlying
interest” means the assets, liabilities, other interests or a combination
thereof underlying a derivative instrument, including, without limitation, any
one or more securities, currencies, rates, indices, commodities or derivative
instruments.

1. Gives the holder the right to purchase
an underlying financial instrument at a given price and time or at a series of
prices and times outlined in the warrant agreement; and

2. Is issued alone or in connection with
the sale of other securities, including, without limitation, as part of a
merger or recapitalization agreement, or to facilitate the divestiture of the
securities of another business entity.

NRS 682A.245Qualifications for asset-backed securities.To qualify as an asset-backed security, a
trust or other special purpose bankruptcy-remote business entity must meet the
following conditions:

1. The trust or other business entity is
established solely for the purpose of acquiring specific types of assets or
rights to cash flows, issuing securities and other instruments representing an
interest in or right to receive cash flows from those assets or rights, and
engaging in activities required to service the assets or rights and any credit
enhancement or support features held by the trust or other business entity; and

2. The assets of the trust or other
business entity consist solely of interest-bearing obligations or other
contractual obligations representing the right to receive payment from the cash
flows from the assets or rights. The existence of credit enhancements,
including, without limitation, letters of credit or guarantees, or support
features, including, without limitation, swap agreements, do not cause a
security or other instrument to be ineligible as an asset-backed security.

1. Control, as defined in NRS 682A.047, shall be deemed to exist if a person,
directly or indirectly, owns, controls, holds with the power to vote or holds
proxies representing 10 percent or more of the voting securities of another
person.

2. A presumption of control may be rebutted
by a showing that control does not exist in fact.

3. The Commissioner may determine, after
furnishing all interested persons notice and an opportunity to be heard and
making specific findings of fact to support the determination, that control
exists in fact, notwithstanding the absence of a presumption to that effect.

1. Except as otherwise provided in this
section, the counterparty exposure amount is the net amount of credit risk
attributable to an over-the-counter derivative instrument. The amount of credit
risk equals:

(a) The market value of the over-the-counter
derivative instrument if the liquidation of the derivative instrument would
result in a final cash payment to the insurer; or

(b) Zero, if the liquidation of the derivative
instrument would not result in a final cash payment to the insurer.

2. If over-the-counter derivative
instruments are entered into in accordance with a written master agreement
which provides for netting of payments owed by the respective parties, and the
domiciliary jurisdiction of the counterparty is either within the United States
or, if not within the United States, within a foreign jurisdiction listed in
the Purposes and Procedures Manual of the SVO as eligible for netting,
the net amount of credit risk is the greater of zero or the net sum of:

(a) The market value of the over-the-counter
derivative instruments entered into in accordance with the agreement, the
liquidation of which would result in a final cash payment to the insurer; and

(b) The market value of the over-the-counter
derivative instruments entered into in accordance with the agreement, the
liquidation of which would result in a cash payment by the insurer to the
business entity.

3. For open transactions, market value
must be determined at the end of the most recent quarter of the insurer’s
fiscal year and must be reduced by the market value of acceptable collateral
held by the insurer or placed in escrow by one or both parties.

NRS 682A.275Qualifications for equivalent securities.To qualify as equivalent securities, the
securities must be:

1. In a securities lending transaction,
securities that are identical to the loaned securities in all features
including the amount of the loaned securities, except as to certificate number
if held in physical form, but if any different security is exchanged for a
loaned security by recapitalization, merger, consolidation or other corporate
action, the different security shall be deemed to be the loaned security;

2. In a repurchase transaction, securities
that are identical to the purchased securities in all features including the
amount of the purchased securities, except as to the certificate number if held
in physical form; or

3. In a reverse repurchase transaction,
securities that are identical to the sold securities in all features including
the amount of the sold securities, except as to the certificate number if held
in physical form.

1. An investment shall not be deemed a
foreign investment if the issuing person, qualified primary credit source or
qualified guarantor is a domestic jurisdiction or a person domiciled in a
domestic jurisdiction unless:

(a) The issuing person is a shell business
entity; and

(b) The investment is not assumed, accepted,
guaranteed or insured or otherwise backed by a domestic jurisdiction or a
person, that is not a shell business entity, domiciled in a domestic
jurisdiction.

2. For the purposes of this section:

(a) “Qualified guarantor” means a guarantor
against which an insurer has a direct claim for full and timely payment,
evidenced by a contractual right for which an enforcement action can be brought
in a domestic jurisdiction.

(b) “Qualified primary credit source” means the
credit source to which an insurer looks for payment as to an investment and
against which an insurer has a direct claim for full and timely payment,
evidenced by a contractual right for which an enforcement action can be brought
in a domestic jurisdiction.

(c) “Shell business entity” means a business
entity having no economic substance, except as a vehicle for owning interests
in assets issued, owned or previously owned by a person domiciled in a foreign
jurisdiction.

1. To qualify as a special rated credit
instrument the instrument must be:

(a) An instrument that is structured so that, if
it is held until retired by or on behalf of the issuer, its rate of return,
based on its purchase cost and any cash flow stream possible in accordance with
the structure of the transaction, may become negative because of reasons other
than the credit risk associated with the issuer of the instrument. A rated
credit instrument is not a special rated credit instrument for the purposes of
this section if it is:

(1) A share in a class one bond mutual
fund;

(2) An instrument, other than an
asset-backed security, with payments of par value fixed as to amount and
timing, or callable but in any event payable only at par or greater, and
interest or dividend cash flows that are based on either a fixed or variable
rate determined by reference to a specified rate or index;

(3) An instrument, other than an
asset-backed security, that has a par value and is purchased at a price not
more than 110 percent of par;

(4) An instrument, including an
asset-backed security, whose rate of return would become negative only as a
result of a prepayment due to casualty, condemnation, economic obsolescence of
collateral or change of law;

(5) An asset-backed security that relies
on collateral that meets the requirements of subparagraph (2), the par value of
which collateral:

(I) Is not allowed to be paid sooner
than one-half of the remaining term to maturity from the date of acquisition;

(II) Is allowed to be paid before
maturity only at a premium sufficient to provide a yield to maturity for the
investment, considering the amount prepaid and reinvestment rates at the time
of early repayment, at least equal to the yield to maturity of the initial
investment; or

(III) Is allowed to be paid before
maturity at a premium at least equal to the yield of a treasury issue of
comparable remaining life; or

(6) An asset-backed security that relies
on cash flows from assets that are not prepayable at any time at par, but is
not otherwise governed by subparagraph (5), if the asset-backed security has a
par value reflecting principal payments to be received if held until retired by
or on behalf of the issuer and is purchased at a price not more than 105
percent of such par amount.

(b) An asset-backed security that:

(1) Relies on cash flows from assets that
are prepayable at par at any time;

(2) Does not make payments of par that are
fixed as to amount and timing; and

(3) Has a negative rate of return at the
time of acquisition if a prepayment threshold assumption is used. As used in
this subsection, “prepayment threshold assumption” includes:

(I) Two times the prepayment
expectation reported by a recognized, publicly available source as being the
median of expectations contributed by broker dealers or other entities, except
insurers, engaged in the business of selling or evaluating such securities or
assets. The prepayment expectation used in this calculation is, at the
insurer’s election, the prepayment expectation for pass-through securities of
the Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation or the Government National Mortgage Association, or, for other
assets of the same type as the assets that underlie the asset-backed security,
in either case with a gross weighted average coupon of the assets that underlie
the asset-backed security.

(II) Another prepayment threshold
assumption specified by the Commissioner by regulation adopted pursuant to NRS 682A.388.

2. For the purposes of paragraph (b) of
subsection 1, if the asset-backed security is purchased in combination with one
or more other asset-backed securities that are supported by identical
underlying collateral, the insurer may calculate the rate of return for these specific
combined asset-backed securities in combination. The insurer shall maintain
documentation demonstrating that such securities were acquired and are
continuing to be held in combination.

NRS 682A.300Investments and investment practices required to conform with
this chapter.Insurers may
acquire, hold or invest in investments or engage in investment practices as set
forth in this chapter. Investments not conforming to the provisions of this
chapter are not admitted assets.

NRS 682A.305Requirements for admitted assets.Subject
to the provisions of NRS 682A.310, an insurer
shall not acquire or hold an investment as an admitted asset unless at the time
of acquisition the investment is:

1. Eligible for the payment or accrual of
interest or a discount, whether in cash or securities, eligible to receive
dividends or other distributions or is otherwise income producing; or

3. The insurer acquires the investments in
the following circumstances:

(a) As payment on account of existing indebtedness
or in connection with the refinancing, restructuring or workout of existing
indebtedness, if taken to protect the insurer’s interest in that investment;

(b) As realization on collateral for an
obligation;

(c) In connection with an otherwise qualified
investment or investment practice, as interest on, or a dividend or other
distribution related to, the investment or investment practice, or in
connection with the refinancing of the investment, in each case for no
additional or only nominal consideration;

(d) Under a lawful and bona fide agreement of
recapitalization or voluntary or involuntary reorganization in connection with
an investment held by the insurer; or

(e) Under a bulk reinsurance, merger or
consolidation transaction approved by the Commissioner if the assets constitute
admissible investments for the ceding, merged or consolidated companies.

NRS 682A.315Limitation on time for admitted asset acquired by exemption.

1. An investment, or portion of an
investment, acquired by an insurer in accordance with NRS
682A.310 becomes a nonadmitted asset 3 years, or 5 years in the case of
mortgage loans and real estate, after the date of its acquisition, unless
within that period the investment has become a qualified investment in
accordance with a provision of this chapter, other than NRS
682A.310, but an investment acquired in accordance with an agreement of
bulk reinsurance, merger or consolidation may be qualified for a longer period
if so provided in the plan for reinsurance, merger or consolidation as approved
by the Commissioner.

2. Upon application by the insurer, and a
showing that the nonadmission of an asset held in accordance with NRS 682A.310 would materially injure the interests of
the insurer, the Commissioner may extend the period of admissibility for an
additional reasonable period of time.

NRS 682A.320Qualification of investment based on date of acquisition or date
of commitment to acquire.Except
as otherwise provided in NRS 682A.325 and 682A.335, an investment shall be deemed to qualify
pursuant to this chapter if, on the date the insurer committed to acquire the
investment or on the date of its acquisition, it would have qualified pursuant
to this chapter. For the purposes of determining limitations contained in this
chapter, an insurer shall give appropriate recognition to any commitments to
acquire investments.

NRS 682A.325Applicability of law to admitted assets or certain transactions
held or entered on or before July 1, 2015.

1. An investment, held as an admitted
asset by an insurer on July 1, 2015, which qualified pursuant to this chapter
before July 1, 2015, shall be deemed to remain qualified as an admitted asset
pursuant to this chapter.

2. Each specific transaction constituting
an investment practice of the type described in this chapter that was lawfully
entered into by an insurer, and was in effect on July 1, 2015, must continue to
be allowed in accordance with the provisions of this chapter until its
expiration or termination in accordance with its terms.

NRS 682A.330Computation of limitations based on admitted assets.Unless otherwise specified, an investment
limitation computed on the basis of an insurer’s admitted assets or capital and
surplus shall relate to the amount required to be shown on the statutory
balance sheet of the insurer most recently required to be filed with the
Commissioner. For purposes of computing any limitation based on admitted
assets, the insurer shall deduct from the amount of its admitted assets the
amount of the liability recorded on its statutory balance sheet for:

1. The return of acceptable collateral
received in a reverse repurchase transaction or a securities lending
transaction;

2. Cash received in a dollar roll
transaction; and

3. The amount reported as borrowed money
in the most recently filed financial statement to the extent not included in
subsections 1 and 2.

NRS 682A.335Qualification or requalification of admitted asset on or after
date of acquisition.An investment
qualified, in whole or in part, for acquisition or holding as an admitted asset
may be qualified or requalified at the time of acquisition or a later date, in
whole or in part, in accordance with any section of this chapter if the
relevant conditions contained in that section are satisfied at the time of
qualification or requalification.

NRS 682A.340Required documentation of acquisition.An
insurer shall maintain documentation demonstrating that investments were
acquired in accordance with the provisions of this chapter, and specifying the
section of this chapter pursuant to which they were acquired.

NRS 682A.345Agreements to purchase securities in advance of issuance prohibited.An insurer shall not enter into an agreement
to purchase securities in advance of their issuance for resale to the public as
part of a distribution of the securities by the issuer, or otherwise guarantee
the distribution, except that an insurer may acquire privately placed
securities with registration rights.

NRS 682A.350Order by Commissioner to alter investment practice.Notwithstanding the provisions of this
chapter, the Commissioner, for good cause, may, in accordance with the
provisions of chapter 233B of NRS, order an
insurer to nonadmit, limit, dispose of, withdraw from or discontinue an
investment or investment practice. The authority of the Commissioner pursuant
to this section is in addition to any other authority of the Commissioner.

NRS 682A.365Adoption by board of written plan for investments.An insurer’s board of directors shall adopt a
written plan for acquiring and holding investments and for engaging in
investment practices that specifies guidelines as to the quality, maturity and
diversification of investments and other specifications, including, without
limitation, investment strategies intended to ensure that the investments and
investment practices are appropriate for the business conducted by the insurer,
its liquidity needs and its capital and surplus. The board of directors shall
review and assess the insurer’s technical investment and administrative
capabilities and expertise before adopting a written plan concerning an
investment strategy or practice.

NRS 682A.367Supervision and direction of board; formal resolution of board
regarding investments.Investments
acquired and held pursuant to this chapter must be acquired and held under the
supervision and direction of the board of directors of the insurer. The board
of directors shall evidence by formal resolution, at least annually, that it
has determined whether all investments have been made in accordance with
delegations, standards, limitations and investment objectives prescribed by the
board or a committee of the board charged with the responsibility to direct the
insurer’s investments.

NRS 682A.369Quarterly review of investments and written plan for
investments.On no less than a
quarterly basis, and more often if deemed appropriate, an insurer’s board of
directors or a committee of the board shall:

1. Receive and review a summary report on
the insurer’s investment portfolio, its investment activities and practices
engaged in pursuant to delegated authority, in order to determine whether the
investment activity or practice of the insurer is consistent with its written
plan; and

NRS 682A.371Availability of documentation to board.In
discharging its duties pursuant to NRS 682A.365 to
682A.375, inclusive, the board of directors shall
require that the records of any authorizations or approvals, other
documentation as the board may require and reports of any action taken pursuant
to authority delegated in accordance with the written plan referred to in NRS 682A.365 be made available on a regular basis to
the board of directors.

NRS 682A.373Standard of care.In
discharging its duties pursuant to NRS 682A.365 to
682A.375, inclusive, the board of directors of an
insurer shall perform its duties in good faith and with that degree of care
that ordinarily prudent individuals in like positions would use under similar
circumstances.

NRS 682A.375“Board of directors” refers to any equivalent governing body.If an insurer does not have a board of
directors, all references to the board of directors in this chapter shall be
deemed to be references to the governing body of the insurer having authority
equivalent to that of a board of directors.

(a) Invest in an obligation or security, or make
a guarantee for the benefit of or in favor of an officer or director of the
insurer, except as provided in NRS 682A.382 and 682A.384;

(b) Invest in an obligation or security, make a
guarantee for the benefits of or in favor of, or make other investments in a
business entity of which 10 percent or more of the voting securities or equity
interests are owned directly or indirectly by, or for the benefit of, one or
more officers or directors of the insurer, except as authorized in chapter 692C of NRS or provided in NRS 682A.382 and 682A.384;

(c) Engage on its own behalf, or through one or
more affiliates, in a transaction or series of transactions designed to evade
the prohibitions of this chapter;

(d) Invest in a partnership as a general partner,
except that an insurer may make an investment as a general partner:

(1) If all other partners are subsidiaries
of the insurer;

(2) For the purpose of:

(I) Meeting cash calls committed to
before July 1, 2015;

(II) Completing those specific
projects or activities of the partnership in which the insurer was a general
partner on July 1, 2015, that had been undertaken as of that date; or

(III) Making capital improvements to
property owned by the partnership on July 1, 2015, if the insurer was a general
partner as of that date; or

(e) Invest in or lend its funds upon the security
of shares of its own stock, except that an insurer may acquire shares of its
own stock for the following purposes:

(1) Conversion of a stock insurer into a
mutual or reciprocal insurer or a mutual or reciprocal insurer into a stock
insurer;

(2) Issuance to the insurer’s officers,
employees or agents in connection with a plan approved by the Commissioner for
converting a publicly held insurer into a privately held insurer pursuant to NRS 693A.400 to 693A.540, inclusive, or in connection
with other stock option and employee benefit plans; or

(3) In accordance with any other plan
approved by the Commissioner.

2. Nothing contained in paragraph (d) of
subsection 1 shall be construed to prohibit a subsidiary or other affiliate of
the insurer from becoming a general partner.

3. Any investment or loan made by an
insurer in accordance with the provisions of paragraph (e) of subsection 1 must
not be an admitted asset of the insurer.

1. Except as otherwise provided in NRS 682A.384, an insurer shall not, without the prior
written approval of the Commissioner, directly or indirectly:

(a) Make a loan to, or another investment in, an
officer or director of the insurer, or a person in which the officer or
director has any direct or indirect financial interest;

(b) Make a guarantee for the benefit of, or in
favor of, an officer or director of the insurer, or a person in which the
officer or director has any direct or indirect financial interest; or

(c) Enter into an agreement for the purchase or
sale of property from or to an officer or director of the insurer, or a person
in which the officer or director has any direct or indirect financial interest.

2. For the purposes of this section, an
officer or director shall not be deemed to have a financial interest by reason
of an interest that is held directly or indirectly through the ownership of
equity interests representing less than 2 percent of all outstanding equity
interests issued by a person that is a party to the transaction, or solely by
reason of that individual’s position as a director or officer of a person that
is a party to the transaction.

3. This section does not allow an
investment that is prohibited by NRS 682A.380.

4. This section does not apply to a
transaction between an insurer and any of its subsidiaries or affiliates that
is entered into in compliance with the provisions of chapter 692C of NRS, other than a transaction
between an insurer and its officer or director.

NRS 682A.384Permissible loans.An
insurer may, without the prior written approval of the Commissioner, make:

1. Policy loans in accordance with the
terms of the policy or contract and NRS 682A.460;

2. Advances to officers or directors for
expenses reasonably expected to be incurred in the ordinary course of the
insurer’s business or guarantees associated with credit or charge cards issued,
or credit extended, for the purpose of financing these expenses;

3. Loans secured by the principal
residence of an existing or new officer of the insurer made in connection with
the officer’s relocation at the insurer’s request, if the loans comply with the
requirements of NRS 682A.430 to 682A.436, inclusive, or 682A.540
to 682A.546, inclusive, and the terms and
conditions otherwise are the same as those generally available from
unaffiliated third parties;

4. Secured loans to an existing or new
officer of the insurer made in connection with the officer’s relocation at the
insurer’s request, if the loans:

(a) Do not have a term exceeding 2 years;

(b) Are required to finance mortgage loans
outstanding at the same time on the prior and new residences of the officer;

(c) Do not exceed an amount equal to the equity
of the officer in the prior residence; and

(d) Are required to be fully repaid upon the
earlier of the end of the 2-year period or the sale of the prior residence; or

5. Loans and advances to officers or
directors made in compliance with state or federal law specifically related to
the loans and advances by a regulated noninsurance subsidiary or affiliate of
the insurer in the ordinary course of business and on terms not more favorable
than available to other customers of the entity.

NRS 682A.386Valuation of investments.For
the purposes of this chapter, the value or amount of an investment acquired or
held, or an investment practice engaged in, pursuant to this chapter, unless
otherwise specified in this title, is the value at which assets of an insurer
are required to be reported for statutory accounting purposes as determined in
accordance with procedures prescribed in published accounting and valuation
standards of the NAIC, including, without limitation, the Purposes and
Procedures Manual of the SVO and the Valuation of Securities Manual,
the Accounting Practices and Procedures Manual, the Annual Statement
Instructions or any successor valuation procedures officially adopted by
the NAIC.

1. Except as otherwise specified in this
chapter, an insurer shall not acquire, directly or indirectly through an
investment subsidiary, an investment in accordance with the provisions of this
chapter if, as a result of and after giving effect to the investment, the insurer
would hold more than 3 percent of its admitted assets in investments of all
kinds issued, assumed, accepted, insured or guaranteed by a single person, or 5
percent of its admitted assets in investments in the voting securities of a
depository institution or any company that controls the institution.

2. The limitations in subsection 1 do not
apply to the aggregate amounts insured by a single financial guaranty insurer
with the highest generic rating issued by a nationally recognized statistical
rating organization.

3. Asset-backed securities are not subject
to the limitations in subsection 1. However, an insurer shall not acquire an
asset-backed security if, as a result of and after giving effect to the
investment, the aggregate amount of asset-backed securities secured by, or
evidencing an interest in, a single asset or single pool of assets held by a
trust or other business entity held by the insurer would exceed 3 percent of
its admitted assets.

1. An insurer shall not acquire, directly
or indirectly through an investment subsidiary, an investment in accordance
with the provisions of NRS 682A.408, 682A.420 to 682A.428,
inclusive, or 682A.440 to 682A.448,
inclusive, or counterparty exposure in accordance with the provisions of NRS 682A.456 if, as a result of and after giving
effect to the investment:

(a) The aggregate amount of medium and lower
grade investments held by the insurer would exceed 20 percent of its admitted
assets;

(b) The aggregate amount of lower grade
investments held by the insurer would exceed 10 percent of its admitted assets;

(c) The aggregate amount of investments rated 5
or 6 by the SVO held by the insurer would exceed 3 percent of its admitted
assets;

(d) The aggregate amount of investments rated 6
by the SVO held by the insurer would exceed 1 percent of its admitted assets;

(e) The aggregate amount of medium and lower
grade investments held by the insurer that receive as cash income less than the
equivalent yield for United States Treasury issues with a comparative average
life, would exceed 1 percent of its admitted assets;

(f) The aggregate amount of medium and lower
grade investments issued, assumed, guaranteed, accepted or insured by any one
person or, as to asset-backed securities secured by or evidencing an interest
in a single asset or pool of assets, held by the insurer would exceed 1 percent
of its admitted assets; or

(g) The aggregate amount of lower grade
investments issued, assumed, guaranteed, accepted or insured by any one person
or, as to asset-backed securities secured by or evidencing an interest in a
single asset or pool of assets, held by the insurer would exceed 0.5 percent of
its admitted assets.

2. If an insurer attains or exceeds the
limit of any one rating category referred to in this section, the insurer is
not precluded from acquiring investments in other rating categories subject to
the specific and multicategory limits applicable to those investments.

1. An insurer shall not acquire, directly
or indirectly through an investment subsidiary, a Canadian investment
authorized by the provisions of this chapter if, as a result of and after
giving effect to the investment, the aggregate amount of these investments held
by the insurer would exceed 40 percent of its admitted assets, or if the
aggregate amount of Canadian investments not acquired in accordance with the
provisions of paragraph (c) or (d) of subsection 1 of NRS
682A.408 held by the insurer would exceed 25 percent of its admitted
assets.

2. As to an insurer that is authorized to
do business in Canada or that has outstanding insurance, annuity or reinsurance
contracts on lives or risks resident or located in Canada and denominated in
Canadian currency, the limitations in subsection 1 must be increased by the
greater of:

(a) The amount the insurer is required by
Canadian law to invest in Canada or to be denominated in Canadian currency; or

(b) An amount not to exceed 115 percent of the
amount of its reserves and other obligations under contracts on lives or risks
resident or located in Canada.

1. Subject to the limitations of NRS 682A.404, but not to the limitations of NRS 682A.402, an insurer may acquire rated credit
instruments issued, assumed, guaranteed or insured by:

(a) The United States;

(b) A government-sponsored enterprise of the
United States, if the instruments of the government-sponsored enterprise are
assumed, guaranteed or insured by the United States or are otherwise backed or
supported by the full faith and credit of the United States;

(c) Canada; or

(d) A government-sponsored enterprise of Canada,
if the instruments of the government-sponsored enterprise are assumed,
guaranteed or insured by Canada or are otherwise backed or supported by the
full faith and credit of Canada.

2. An insurer shall not acquire an
instrument in accordance with paragraph (c) or (d) of subsection 1 if, as a
result of and after giving effect to the investment, the aggregate amount of
investments held by the insurer in accordance with paragraph (c) or (d) of
subsection 1 would exceed 40 percent of its admitted assets.

3. Subject to the limitations of NRS 682A.404, but not to the limitations of NRS 682A.402, an insurer may acquire credit rated
instruments, excluding asset-backed securities:

(a) Issued by a government money market mutual
fund, a class one money market mutual fund or a class one bond mutual fund;

(b) Issued, assumed, guaranteed or insured by a
government-sponsored enterprise of the United States other than those eligible
under subsection 1;

(c) Issued, assumed, guaranteed or insured by a
state, if the instruments are general obligations of the state; or

(d) Issued by a multilateral development bank.

4. An insurer shall not acquire an
instrument of any one fund, any one enterprise or entity or any one state as
described in subsection 3 if, as a result of and after giving effect to the
investment, the aggregate amount of investments held in any one fund,
enterprise or entity, or state would exceed 10 percent of the insurer’s
admitted assets.

5. Subject to the limitations of NRS 682A.402, 682A.404
and 682A.406, an insurer may acquire preferred
stocks that are not foreign investments and which meet the requirements of
rated credit instruments if, as a result of and after giving effect to the
investment:

(a) The aggregate amount of preferred stocks held
by the insurer in accordance with this section does not exceed 20 percent of
the insurer’s admitted assets; and

(b) The aggregate amount of preferred stocks held
by the insurer in accordance with this section which are not sinking fund
stocks or rated P1 or P2 by the SVO does not exceed 10 percent of the insurer’s
admitted assets.

6. Subject to the limitations of NRS 682A.402, 682A.404
and 682A.406, in addition to those investments
eligible pursuant to subsections 1 to 5, inclusive, an insurer may acquire rated
credit instruments that are not foreign investments.

7. An insurer shall not acquire special
rated credit instruments as described in this section if, as a result of and
after giving effect to the investment, the aggregate amount of special rated
credit instruments held by the insurer would exceed 5 percent of the insurer’s
admitted assets.

1. An insurer may acquire investments in
investment pools that invest only in:

(a) Obligations with an SVO rating of 1 or 2, or
the equivalent of an SVO rating of 1 or 2 by a nationally recognized
statistical rating organization recognized by the SVO, or, in the absence of an
equivalent rating, the issuer has outstanding obligations with the equivalent
of an SVO rating of 1 or 2, or an equivalent rating, and have:

(1) A remaining maturity of 397 days or
less or a put option that entitles the holder to receive the principal amount
of the obligation with the ability to exercise the put option through maturity
at specified intervals not exceeding 397 days; or

(2) A remaining maturity less than or
equal to 3 years and a floating interest rate that resets not less frequently
than quarterly on the basis of a current short-term index and is not subject to
a maximum limit, if the obligations do not have an interest rate that varies
inversely to market interest rate changes. For the purposes of this
subparagraph, qualifying short-term indexes include, without limitation, the
federal funds rate, prime rate, treasury bills rates, the London Interbank
Offered Rate or commercial paper rates.

(c) Securities lending, repurchase and reverse
repurchase transactions that meet all the requirements of NRS 682A.438, except the quantitative limitations of
subsection 4 of NRS 682A.438.

(d) Investments which an insurer may acquire
pursuant to this chapter if the insurer’s proportionate interest in the amount
invested in these investments does not exceed the applicable limits of this
chapter.

2. For an investment in an investment pool
to be qualified pursuant to this chapter, the investment pool must not:

(a) Acquire securities issued, assumed,
guaranteed or insured by the insurer or an affiliate of the insurer;

(b) Borrow or incur any indebtedness for borrowed
money, except for securities lending and reverse repurchase transactions that
meet the requirements of NRS 682A.438, except the
quantitative limitations of subsection 4 of NRS
682A.438; or

(c) Permit the aggregate value of securities
loaned or sold to, purchased from or invested in any one business entity in
accordance with this section to exceed 10 percent of the total assets of the
investment pool.

3. The limitations of NRS 682A.402 do not apply to an insurer’s investment
in an investment pool, however an insurer shall not acquire an investment in an
investment pool in accordance with this section if, as a result of and after
giving effect to the investment, the aggregate amount of investments held by
the insurer in accordance with this section:

(a) In any one investment pool would exceed 10
percent of its admitted assets;

(b) In all investment pools investing in
investments permitted in accordance with paragraph (d) of subsection 1 would
exceed 25 percent of its admitted assets; or

(c) In all investment pools would exceed 35
percent of its admitted assets.

4. For an investment in an investment pool
to be qualified pursuant to this chapter, the manager of the investment pool
must:

(a) Be organized in accordance with the laws of
the United States or a state and designated as the pool manager in a pooling
agreement;

(b) Be the insurer, an affiliated insurer or a
business entity affiliated with the insurer, a qualified bank, a business
entity registered in accordance with the provisions of the Investment Advisers
Act of 1940, 15 U.S.C. §§ 80a-1 et seq., as amended, or, in the case of a
reciprocal insurer or interinsurance exchange, its attorney-in-fact, or in the
case of a United States branch of an alien insurer, its United States manager
or affiliates or subsidiaries of its United States manager;

(c) Compile and maintain detailed accounting
records setting forth:

(1) The cash receipts and disbursements
reflecting each participant’s proportionate investments in the investment pool;

(2) A complete description of all
underlying assets of the investment pool, including, without limitation,
amount, interest rate, maturity date, if any, and other appropriate
designations; and

(3) Other records which, on a daily basis,
allow third parties to verify each participant’s investment in the investment
pool; and

(d) Maintain the assets of the investment pool in
one or more accounts, in the name of or on behalf of the investment pool, in
accordance with a custody agreement with a qualified bank. The custody
agreement must:

(1) State and recognize the claims and
rights of each participant;

(2) Acknowledge that the underlying assets
of the investment pool are held solely for the benefit of each participant in
proportion to the aggregate amount of its investments in the investment pool;
and

(3) Contain an agreement that the
underlying assets of the investment pool must not be commingled with the
general assets of the custodian qualified bank or any other person.

5. The pooling agreement for each
investment pool must be in writing and must provide that:

(a) An insurer and its affiliated insurers or, in
the case of an investment pool investing solely in investments allowed in
accordance with paragraph (a) of subsection 1, the insurer and its
subsidiaries, affiliates or any pension or profit-sharing plan of the insurer,
its subsidiaries and affiliates or, in the case of a United States branch of an
alien insurer, affiliates or subsidiaries of its United States manager, shall
at all times hold 100 percent of the interests in the investment pool.

(b) The underlying assets of the investment pool
must not be commingled with the general assets of the pool manager or any other
person.

(c) In proportion to the aggregate amount of each
pool participant’s interest in the investment pool:

(1) Each participant owns an undivided
interest in the underlying assets of the investment pool; and

(2) The underlying assets of the
investment pool are held solely for the benefit of each participant.

(d) A participant, or in the event of the
participant’s insolvency, bankruptcy or receivership, its trustee, receiver or
other successor-in-interest, may withdraw all or any portion of its investment
from the investment pool in accordance with the terms of the pooling agreement.

(e) Withdrawals may be made on demand without
penalty or other assessment on any business day, but settlements of funds must
occur within a reasonable and customary period thereafter not to exceed 5
business days. Distributions in accordance with this paragraph must be
calculated in each case net of all applicable fees and expenses of the
investment pool. The pooling agreement must provide that the pool manager shall
distribute to a participant, at the discretion of the pool manager:

(1) In cash, the then fair market value of
the participant’s pro rata share of each underlying asset of the investment
pool;

(2) In kind, a pro rata share of each
underlying asset; or

(3) In a combination of cash and in-kind
distributions, a pro rata share in each underlying asset.

(f) The pool manager shall make the records of
the investment pool available for inspection by the Commissioner.

NRS 682A.412Acquisition of equity interests generally permissible.Subject to the limitations of NRS 682A.402, 682A.404
and 682A.406, an insurer may acquire equity
interests in business entities organized in accordance with the laws of any
domestic jurisdiction.

NRS 682A.414Limitation on aggregate amount of investments held in equity
interests.An insurer shall not
acquire an investment in accordance with the provisions of NRS 682A.412 to 682A.418,
inclusive, if, as a result of and after giving effect to the investment, the
aggregate amount of investments held by the insurer in accordance with those
sections would exceed 20 percent of the insurer’s admitted assets, or the
amount of equity interests held by the insurer that are not listed on a
qualified exchange would exceed 5 percent of the insurer’s admitted assets. An
accident and health insurer is not subject to the provisions of NRS 682A.412 to 682A.418,
inclusive, but is subject to the same aggregate limitation on equity interests
as a property and casualty insurer in accordance with the provisions of NRS 682A.502 to 682A.510,
inclusive, and 682A.522 to 682A.528,
inclusive.

NRS 682A.416Restriction on mortgage or real estate holdings acquired or held
as equity interests.An insurer
shall not acquire in accordance with the provisions of NRS
682A.412 to 682A.418, inclusive, any
investments that the insurer may acquire in accordance with the provisions of NRS 682A.430 to 682A.436,
inclusive.

NRS 682A.418Short sale of equity investments.An
insurer shall not short sell equity investments unless the insurer covers the
short sale by owning the equity investment or an unrestricted right to the
equity investment exercisable within 6 months after the short sale.

NRS 682A.420Tangible personal property under lease or other agreement.

1. Subject to the limitations of NRS 682A.402, 682A.404
and 682A.406, an insurer may acquire tangible
personal property or equity interests therein located or used wholly or in part
within a domestic jurisdiction either directly or indirectly through limited
partnership interests and general partnership interests not otherwise
prohibited by paragraph (d) of subsection 1 of NRS
682A.380, joint ventures, stock of an investment subsidiary or membership
interests in a limited-liability company, trust certificates or other similar
instruments.

2. Investments acquired as described in
subsection 1 are eligible only if:

(a) The property is subject to a lease or other
agreement with a person whose rated credit instruments in the amount of the
purchase price of the personal property the insurer could acquire in accordance
with the provisions of NRS 682A.408; and

(b) The lease or other agreement provides the
insurer the right to receive rental, purchase or other fixed payments for the
use or purchase of the property, and the aggregate value of the payments,
together with the estimated residual value of the property at the end of its
useful life and the estimated tax benefits to the insurer resulting from
ownership of the property, must be adequate to return the cost of the insurer’s
investment in the property, plus a return deemed adequate by the insurer.

NRS 682A.422Valuation of personal property under lease.The insurer shall compute the amount of each
investment acquired in accordance with the provisions of NRS 682A.420 to 682A.428,
inclusive, on the basis of the out-of-pocket purchase price and applicable
related expenses paid by the insurer for the investment, net of each borrowing
made to finance the purchase price and expenses, to the extent the borrowing is
without recourse to the insurer.

NRS 682A.424Limitation on aggregate amount of investments held in personal
property under lease.An insurer
shall not acquire an investment in accordance with the provisions of NRS 682A.420 to 682A.428,
inclusive, if, as a result of and after giving effect to the investment, the
aggregate amount of all investments held by the insurer in accordance with the
provisions of NRS 682A.420 to 682A.428, inclusive, would exceed:

1. Two percent of its admitted assets; or

2. One half of one percent of its admitted
assets as to any single item of tangible personal property.

NRS 682A.426Computation of investments held as personal property under lease
for purposes of investment diversification requirements.For the purposes of determining compliance with
the limitations of NRS 682A.402, 682A.404 and 682A.406,
investments acquired by an insurer in accordance with the provisions of NRS 682A.420 to 682A.428,
inclusive, must be aggregated with those acquired in accordance with the
provisions of NRS 682A.408, and each lessee of the
property under a lease referred to in NRS 682A.420
to 682A.428, inclusive, shall be deemed the issuer
of an obligation in the amount of the investment of the insurer in the property
determined as provided in NRS 682A.422.

NRS 682A.428Exempted personal property under lease.Nothing
in NRS 682A.420 to 682A.428,
inclusive, applies to tangible personal property lease arrangements between an
insurer and its subsidiaries and affiliates in accordance with a cost-sharing
arrangement or agreement permitted in accordance with the provisions of chapter 692C of NRS.

1. Subject to the limitations of NRS 682A.402, 682A.404
and 682A.406, an insurer may acquire, either
directly or indirectly through limited partnership interests and general
partnership interests not otherwise prohibited by paragraph (d) of subsection 1
of NRS 682A.380, joint ventures, stock of an
investment subsidiary or membership interests in a limited-liability company,
trust certificates or other similar instruments, obligations secured by
mortgages on real estate situated within a domestic jurisdiction.

2. A mortgage loan which is secured by
other than a first lien must not be acquired unless the insurer is the holder
of the first lien.

3. The obligations held by the insurer and
any obligations with an equal lien priority shall not, at the time of acquisition
of the obligation, exceed:

(a) Ninety percent of the fair market value of
the real estate, if the mortgage loan is secured by a purchase money mortgage
or like security received by the insurer upon disposition of the real estate.

(b) Eighty percent of the fair market value of
the real estate, if the mortgage loan requires immediate scheduled payment in
periodic installments of principal and interest, has an amortization period of
not more than 30 years and periodic payments made not less frequently than
annually. Each periodic payment must be sufficient to ensure that at all times
the outstanding principal balance of the mortgage loan is not greater than the
outstanding principal balance that would be outstanding under a mortgage loan
with the same original principal balance, with the same interest rate and
requiring equal payments of principal and interest with the same frequency over
the same amortization period. Mortgage loans allowed in accordance with this
section are allowed notwithstanding the fact that they provide for a payment of
the principal balance before the end of the period of amortization of the loan.
For residential mortgage loans, the 80-percent limitation may be increased to
97 percent if acceptable private mortgage insurance has been obtained.

(c) Seventy-five percent of the fair market
values of the real estate for mortgage loans that do not meet the requirements
of paragraph (a) or (b).

4. For the purposes of subsections 1, 2
and 3, the amount of an obligation required to be included in the calculation
of the loan-to-value ratio may be reduced to the extent the obligation is
insured by the Federal Housing Administration or guaranteed by the
Administrator of Veterans Affairs, or their successors.

5. A mortgage loan that is held by an
insurer pursuant to NRS 682A.325 or acquired in
accordance with the provisions of NRS 682A.430 to 682A.436, inclusive, and is restructured in a manner
that meets the requirements of a restructured mortgage loan in conformance with
the Accounting Practices and Procedures Manual adopted by the NAIC will
continue to qualify as a mortgage loan in accordance with the provisions of
this chapter.

6. Subject to the limitations of NRS 682A.402, 682A.404
and 682A.406, credit lease transactions that do
not qualify for investment pursuant to NRS 682A.408
are exempt from the provisions of subsections 1, 2 and 3 if they meet the
following criteria:

(a) The loan amortizes over the initial fixed
lease term at least in an amount sufficient so that the loan balance at the end
of the lease term does not exceed the original appraised value of the real
estate;

(b) The lease payments cover or exceed the total
debt service over the life of the loan;

(c) A tenant or its affiliated entity whose rated
credit instruments have an SVO rating of 1 or 2, or a comparable rating from a
nationally recognized statistical rating organization recognized by the SVO,
has a full faith and credit obligation to make the lease payments;

(d) The insurer holds or is the beneficial holder
of a first lien mortgage on the real estate;

(e) The expenses of the real estate are passed
through to the tenant, excluding exterior, structural, parking and heating,
ventilation and air conditioning replacement expenses, unless annual escrow
contributions, from cash flows derived from the lease payments, cover the
expense shortfall; and

(f) There is a perfected assignment of the rents
due pursuant to the lease to, or for the benefit of, the insurer.

1. An insurer may acquire, manage and
dispose of real estate situated in a domestic jurisdiction either directly or
indirectly through limited partnership interests and general partnership
interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment
subsidiary or membership interests in a limited-liability company, trust
certificates or other similar instruments. The real estate must be income
producing or intended for improvement or development for investment purposes
under an existing program, in which case the real estate shall be deemed to be
income producing.

2. The real estate may be subject to
mortgages, liens or other encumbrances, the amount of which must, to the extent
that the obligations secured by the mortgages, liens or encumbrances are
without recourse to the insurer, be deducted from the amount of the investment
of the insurer in the real estate for purposes of determining compliance with
subsections 2 and 3 of NRS 682A.436.

1. An insurer may acquire, manage and
dispose of real estate for the convenient accommodation of the insurer’s, and
its affiliates’, business operations, including home office, branch office and
field office operations.

2. Real estate acquired as described in
this section may include excess space for rent to others, if the excess space,
valued at its fair market value, would otherwise be an allowed investment in
accordance with the provisions of NRS 682A.432 and
is so qualified by the insurer.

3. The real estate acquired as described
in this section may be subject to one or more mortgages, liens or other
encumbrances, the amount of which must, to the extent that the obligations
secured by the mortgages, liens or encumbrances are without recourse to the
insurer, be deducted from the amount of the investment of the insurer in the
real estate for purposes of determining compliance with subsection 4 of NRS 682A.436.

4. For the purposes of this section,
business operations must not include that portion of real estate used for the
direct provision of health care services by an accident and health insurer for
its insureds. An insurer may acquire real estate used for these purposes under NRS 682A.432.

NRS 682A.436Limitation on aggregate amount of investments held in mortgage
loans and real estate.

1. An insurer shall not acquire an
investment in accordance with the provisions of NRS
682A.430 if, as a result of and after giving effect to the investment, the
aggregate amount of all investments held by the insurer pursuant to that
section would exceed:

(a) One percent of its admitted assets in
mortgage loans covering any one secured location;

(b) One-quarter of one percent of its admitted
assets in construction loans covering any one secured location; or

(c) Two percent of its admitted assets in
construction loans in the aggregate.

2. An insurer shall not acquire an
investment under NRS 682A.432 if, as a result of
and after giving effect to the investment and any outstanding guarantees made
by the insurer in connection with the investment, the aggregate amount of
investments held by the insurer under NRS 682A.432
plus the guarantees outstanding would exceed:

(a) One percent of its admitted assets in one
parcel or group of contiguous parcels of real estate, except that this
limitation does not apply to that portion of real estate used for the direct
provision of health care services by an accident and health insurer for its
insureds, such as hospitals, medical clinics, medical professional buildings or
other health facilities used for the purpose of providing health services; or

(b) Fifteen percent of its admitted assets in the
aggregate, but not more than 5 percent of its admitted assets as to properties
that are to be improved or developed.

3. An insurer shall not acquire an
investment pursuant to NRS 682A.430 or 682A.434 if, as a result of and after giving effect
to the investment and any guarantees made by the insurer in connection with the
investment, the aggregate amount of all investments held by the insurer in
accordance with those sections plus the guarantees outstanding would exceed 45
percent of the insurer’s admitted assets. An insurer may exceed this limitation
by not more than 30 percent of the insurer’s admitted assets if:

(a) This increased amount is invested only in
residential mortgage loans;

(b) The insurer has not more than 10 percent of
the insurer’s admitted assets invested in mortgage loans other than residential
mortgage loans;

(c) The loan-to-value ratio of each residential
mortgage loan does not exceed 60 percent at the time the mortgage loan is
qualified pursuant to this increased authority, and the fair market value is
supported by an appraisal that is not more than 2 years old and prepared by an
independent appraiser;

(d) A single mortgage loan qualified pursuant to
this increased authority does not exceed 0.5 percent of the insurer’s admitted
assets;

(e) The insurer files with the Commissioner, and
receives approval from the Commissioner for, a plan that is designed to result
in a portfolio of residential mortgage loans that is sufficiently
geographically diversified; and

(f) The insurer agrees to file annually with the
Commissioner records which demonstrate that the insurer’s portfolio of
residential mortgage loans is geographically diversified in accordance with the
plan.

4. The limitations of NRS 682A.402, 682A.404
and 682A.406 do not apply to an insurer’s
acquisition of real estate under NRS 682A.432. An
insurer shall not acquire real estate under NRS
682A.432 if, as a result of and after giving effect to the acquisition, the
aggregate amount of real estate held by the insurer in accordance with that
section would exceed 10 percent of its admitted assets. With the approval of
the Commissioner, additional amounts of real estate may be acquired under NRS 682A.432.

1. The insurer’s board of directors shall
adopt a written plan that is consistent with the requirements of the written
plan in NRS 682A.365 which specifies the
guidelines and objectives to be followed, including, without limitation:

(a) A description of how cash received will be
invested or used for general corporate purposes of the insurer;

(b) Operational procedures to manage interest
rate risk, counterparty default risk, the conditions under which proceeds from
reverse repurchase transactions may be used in the ordinary course of business
and the use of acceptable collateral in a manner that reflects the liquidity
needs of the transactions; and

(c) The extent to which the insurer may engage in
these transactions.

2. The insurer shall enter into a written
agreement for all transactions authorized by this section other than dollar
roll transactions. The written agreement must require that each transaction
terminate not more than 1 year after its inception or upon the earlier demand
of the insurer. The agreement must be with the business entity counterparty,
but for securities lending transactions, the agreement may be with an agent
acting on behalf of the insurer, if the agent is a qualified business entity
and if the agreement:

(a) Requires the agent to enter into separate
agreements with each counterparty that are consistent with the requirements of
this section; and

(b) Prohibits securities lending transactions
under the agreement with the agent or its affiliates.

3. Cash received in a transaction as
described in this section must be invested in accordance with the provisions of
this chapter and in a manner that recognizes the liquidity needs of the
transaction or used by the insurer for its general corporate purposes. For so
long as the transaction remains outstanding, the insurer, its agent or
custodian shall maintain, as to acceptable collateral received in a transaction
in accordance with this section, either physically or through book entry
systems of the Federal Reserve, the Depository Trust Company, the Participants
Trust Company or any other securities depositories approved by the
Commissioner:

(a) Possession of the acceptable collateral;

(b) A perfected security interest in the
acceptable collateral; or

(c) In the case of a jurisdiction outside of the
United States, title to, or rights of a secured creditor to, the acceptable
collateral.

4. The limitations of NRS 682A.402, 682A.404, 682A.406 and 682A.440 to
682A.448, inclusive, do not apply to the business
entity counterparty exposure created by transactions entered into under this
section. For purposes of calculations made to determine compliance with this
subsection, no effect will be given to the insurer’s future obligation to
resell securities, in the case of a repurchase transaction, or to repurchase
securities, in the case of a reverse repurchase transaction. An insurer shall
not enter into a transaction under this section if, as a result of and after
giving effect to the transaction:

(a) The aggregate amount of securities loaned,
sold or purchased from any one business entity counterparty under this section
would exceed 5 percent of its admitted assets. In calculating the amount sold
to or purchased from a business entity counterparty in accordance with
repurchase or reverse purchase transactions, effect may be given to netting
provisions under a master written agreement.

(b) The aggregate amount of all securities
loaned, sold to or purchased from all business entities under this section
would exceed 40 percent of its admitted assets.

5. In a securities lending transaction,
the insurer shall receive acceptable collateral having a market value on the
transaction date equal to 102 percent or more of the market value of the
securities loaned by the insurer in the transaction on that date. If at any
time the market value of the acceptable collateral is less than the market
value of the loaned securities, the business entity counterparty is obligated
to deliver additional acceptable collateral, the market value of which,
together with the market value of all acceptable collateral held in connection
with the transaction, equals 102 percent or more of the market value of the
loaned securities.

6. In a reverse repurchase transaction,
other than a dollar roll transaction, the insurer shall receive acceptable
collateral having a market value on the transaction date equal to 95 percent or
more of the market value of the securities transferred by the insurer in the
transaction on that date. If at any time the market value of the acceptable
collateral is less than 95 percent of the market value of the securities so
transferred, the business entity counterparty is obligated to deliver
additional acceptable collateral, the market value of which, together with the
market value of all acceptable collateral held in connection with the
transaction, equals 95 percent or more of the market value of the transferred
securities.

7. In a dollar roll transaction, the
insurer shall receive cash in an amount equal to at least the market value of
the securities transferred by the insurer in the transaction on the transaction
date.

8. In a repurchase transaction, the
insurer shall receive as acceptable collateral transferred securities having a
market value equal to 102 percent or more of the purchase price paid by the
insurer for the securities. If at any time the market value of the acceptable
collateral is less than 100 percent of the purchase price paid by the insurer,
the business entity counterparty is obligated to provide additional acceptable
collateral, the market value of which, together with the market value of all acceptable
collateral held in connection with the transaction, equals 102 percent or more
of the purchase price. Securities acquired by an insurer in a repurchase
transaction may not be sold in a reverse repurchase transaction, loaned in a
securities lending transaction or otherwise pledged.

9. To constitute acceptable collateral for
the purposes of this section, a letter of credit must have an expiration date
beyond the term of the subject transaction.

NRS 682A.440Foreign investments.Subject
to the limitations of NRS 682A.402, 682A.404 and 682A.406,
an insurer may acquire foreign investments, or engage in investment practices
with persons of or in foreign jurisdictions, of substantially the same type as
those that an insurer is allowed to acquire pursuant to this chapter, other
than of the type allowed under NRS 682A.410 if, as
a result of and after giving effect to the investments:

1. The aggregate amount of foreign
investments held by the insurer in accordance with this section does not exceed
20 percent of its admitted assets; and

2. The aggregate amount of foreign investments
held by the insurer in accordance with this section in a single foreign
jurisdiction does not exceed 10 percent of its admitted assets as to a foreign
jurisdiction that has a sovereign debt rating of SVO 1 or 3 percent of its
admitted assets as to any other foreign jurisdiction.

1. Subject to the limitations of NRS 682A.402, 682A.404
and 682A.406, an insurer may acquire investments,
or engage in investment practices denominated in foreign currencies, whether or
not they are foreign investments acquired as described in NRS 682A.440, or additional foreign currency exposure
as a result of the termination or expiration of a hedging transaction with
respect to investments denominated in a foreign currency if:

(a) The aggregate amount of investments held by
the insurer in accordance with this section denominated in foreign currencies
does not exceed 10 percent of its admitted assets; and

(b) The aggregate amount of investments held by
the insurer in accordance with this section denominated in the foreign currency
of a single foreign jurisdiction does not exceed 10 percent of its admitted
assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1
or 3 percent of its admitted assets as to any other foreign jurisdiction.

2. An investment must not be considered
denominated in a foreign currency if the acquiring insurer enters into one or
more contracts in transactions allowed under NRS
682A.450 to 682A.458, inclusive, and the
business entity counterparty agrees in the contract or contracts to exchange
all payments made on the foreign currency denominated investment for United
States currency at a rate which effectively insulates the investment cash flows
against future changes in currency exchange rates during the period the
contract or contracts are in effect.

NRS 682A.444Additional foreign investment and foreign currency allowance for
insurers authorized to do business in foreign jurisdiction and holding foreign
contracts.In addition to
investments allowed under NRS 682A.440 and 682A.442, an insurer that is authorized to do
business in a foreign jurisdiction, and that has outstanding insurance, annuity
or reinsurance contracts on lives or risks resident or located in that foreign
jurisdiction and denominated in a foreign currency of that jurisdiction, may
acquire foreign investments respecting that foreign jurisdiction, and may acquire
investments denominated in the currency of that jurisdiction, subject to the
limitations of NRS 682A.402, 682A.404 and 682A.406.
Investments made in accordance with this section in obligations of foreign
governments, their political subdivisions and government-sponsored enterprises
are not subject to the limitations of NRS 682A.402,
682A.404 and 682A.406
if those investments carry an SVO rating of 1 or 2. The aggregate amount of
investments acquired by the insurer in accordance with this section must not
exceed the greater of:

1. The amount the insurer is required by
the law of the foreign jurisdiction to invest in the foreign jurisdiction; or

2. One hundred fifteen percent of the
amount of the insurer’s reserves, net of reinsurance, and other obligations
under the contracts on lives or risks resident or located in the foreign
jurisdiction.

NRS 682A.446Additional foreign investment and foreign currency allowance for
insurers not authorized to do business in foreign jurisdiction but holding
foreign contracts.In addition to
investments allowed under NRS 682A.440 and 682A.442, an insurer that is not authorized to do
business in a foreign jurisdiction, but which has outstanding insurance,
annuity or reinsurance contracts on lives or risks resident or located in that
foreign jurisdiction and denominated in foreign currency of that jurisdiction,
may acquire foreign investments respecting that foreign jurisdiction, and may
acquire investments denominated in the currency of that jurisdiction subject to
the limitations of NRS 682A.402, 682A.404 and 682A.406.
Investments made in accordance with this section in obligations of foreign
governments, their political subdivisions and government-sponsored enterprises
are not subject to the limitations of NRS 682A.402,
682A.404 and 682A.406
if those investments carry an SVO rating of 1 or 2. The aggregate amount of
investments acquired by the insurer in accordance with this section must not
exceed 105 percent of the amount of the insurer’s reserves, net of reinsurance,
and other obligations under the contracts on lives or risks resident or located
in the foreign jurisdiction.

NRS 682A.448Calculation of foreign investments for purposes of determining
compliance with limitations.Investments
acquired in conformance with NRS 682A.440 to 682A.448, inclusive, must be aggregated with
investments of the same types made under this chapter, and in a similar manner,
for purposes of determining compliance with the limitations, if any, contained
in this chapter. Investments in obligations of foreign governments, their
political subdivisions and government-sponsored enterprises of these persons,
except for those exempted by NRS 682A.444 and 682A.446, are subject to the limitations of NRS 682A.402, 682A.404
and 682A.406.

NRS 682A.450Derivative transactions.An
insurer may, directly or indirectly through an investment subsidiary, engage in
derivative transactions as described in NRS 682A.450
to 682A.458, inclusive, pursuant to the following
conditions:

1. An insurer may use derivative
instruments under NRS 682A.450 to 682A.458, inclusive, to engage in hedging
transactions and certain income generation transactions, as these terms may be
further defined in regulations adopted by the Commissioner pursuant to NRS 682A.388; and

2. An insurer must be able to demonstrate
to the Commissioner the intended hedging characteristics and the ongoing
effectiveness of the derivative transaction or combination of the transactions
through cash flow testing or other appropriate analyses.

NRS 682A.452Derivative transactions: Limitations on hedging transactions.An insurer may enter into hedging transactions
under NRS 682A.450 to 682A.458,
inclusive, if, as a result of and after giving effect to the transaction:

1. The aggregate statement value of
options, caps, floors and warrants not attached to another financial instrument
purchased and used in hedging transactions does not exceed 7.5 percent of its
admitted assets;

2. The aggregate statement value of
options, caps and floors written in hedging transactions does not exceed 3
percent of its admitted assets; and

3. The aggregate potential exposure of
collars, swaps, forwards and futures used in hedging transactions does not
exceed 6.5 percent of its admitted assets.

NRS 682A.454Derivative transactions: Limitations on income generation
transactions.An insurer may only
enter into the following types of income generation transactions if, as a
result of and after giving effect to the transactions, the aggregate statement
value of the fixed income assets that are subject to call or which generate the
cash flows for payments under the caps or floors, plus the face value of fixed
income securities underlying a derivative instrument subject to call, plus the
amount of the purchase obligations under the puts, does not exceed 10 percent
of its admitted assets:

1. Sales of covered call options on
noncallable fixed income securities, callable fixed income securities if the
option expires by its terms before the end of the noncallable period or
derivative instruments based on fixed income securities;

2. Sales of covered call options on equity
securities, if the insurer holds in its portfolio, or can immediately acquire
through the exercise of options, warrants or conversion rights already owned,
the equity securities subject to call during the complete term of the call option
sold;

3. Sales of covered puts on investments
that the insurer is allowed to acquire pursuant to this chapter, if the insurer
has escrowed, or entered into a custodian agreement segregating, cash or cash
equivalents with a market value equal to the amount of its purchase obligations
under the put during the complete term of the put option sold; or

4. Sales of covered caps or floors, if the
insurer holds in its portfolio the investments generating the cash flow to make
the required payments under the caps or floors during the complete term that
the cap or floor is outstanding.

NRS 682A.458Commissioner may allow additional derivative transactions by
regulation; limitations.In
accordance with the regulations adopted pursuant to NRS
682A.388, the Commissioner may approve additional transactions involving
the use of derivative instruments in excess of the limits of NRS 682A.452 for other risk-management purposes, but
replication transactions must not be allowed for other than risk-management
purposes.

NRS 682A.460Policy loans.A
life insurer may lend to a policyholder on the security of the cash surrender
value of the policyholder’s policy a sum not exceeding the legal reserve that
the insurer is required to maintain on the policy.

NRS 682A.462Limited exemption from quantitative limits on certain investments.Solely for the purpose of acquiring
investments that exceed the quantitative limitations of NRS
682A.402 to 682A.448, inclusive, an insurer
may acquire in accordance with this section an investment, or engage in
investment practices described in NRS 682A.438,
but an insurer shall not acquire an investment or engage in investment
practices described in NRS 682A.438 in accordance
with this section if, as a result of and after giving effect to the
transaction:

1. The aggregate amount of investments
held by the insurer would exceed 3 percent of its admitted assets; or

2. The aggregate amount of investments as
to one limitation in NRS 682A.402 to 682A.448, inclusive, held by the insurer would exceed
1 percent of its admitted assets.

1. In addition to the authority provided
in NRS 682A.462, an insurer may acquire in
accordance with this section an investment of any kind, or engage in investment
practices described in NRS 682A.438 that are not
specifically prohibited by the provisions of this chapter, without regard to
the categories, conditions, standards or other limitations of NRS 682A.402 to 682A.448,
inclusive, if, as a result of and after giving effect to the transaction, the
aggregate amount of investments held would not exceed the lesser of:

(a) Ten percent of its admitted assets; or

(b) Seventy-five percent of its capital and
surplus.

2. An insurer shall not acquire any
investment or engage in any investment practice in accordance with this section
if, as a result of and after giving effect to the transaction, the aggregate
amount of all investments in any one person held by the insurer would exceed 3
percent of its admitted assets.

NRS 682A.466Additional exemption from certain investment limitations with
approval of Commissioner.In
addition to the investments acquired as described in NRS
682A.462 and 682A.464, an insurer may acquire
in accordance with this section an investment of any kind, or engage in
investment practices described in NRS 682A.438,
that are not specifically prohibited by the provisions of this chapter, without
regard to any limitations of NRS 682A.402 to 682A.448, inclusive, if:

1. The Commissioner grants prior approval;

2. The insurer demonstrates that its
investments are being made in a prudent manner and that the additional amounts
will be invested in a prudent manner; and

3. As a result of and after giving effect
to the transaction the aggregate amount of investments held by the insurer is
not greater than:

(a) Twenty-five percent of its capital and
surplus; or

(b) One hundred percent of capital and surplus
less 10 percent of its admitted assets.

NRS 682A.502Reserve requirements.Subject
to all other limitations and requirements of this chapter, a property and
casualty, financial guaranty, mortgage guaranty or accident and health insurer
shall maintain an amount not less than 100 percent of adjusted loss reserves
and loss adjustment expense reserves, 100 percent of adjusted unearned premium
reserves and 100 percent of statutorily required policy and contract reserves
in:

3. Equity interests that qualify pursuant
to NRS 682A.522 to 682A.528,
inclusive, and which are traded on a qualified exchange;

4. Investments of the type set forth in NRS 682A.550 to 682A.558,
inclusive, if the investments are rated in the highest generic rating category
by a nationally recognized statistical rating organization recognized by the
SVO for rating foreign jurisdictions and if any foreign currency exposure is
effectively hedged through the maturity date of the investments;

5. Qualifying investments of the type set
forth in subsections 2, 3 and 4 that are acquired pursuant to NRS 682A.570 and 682A.572;

6. Interest and dividends receivable on
qualifying investments of the type set forth in subsections 1 to 5, inclusive;
or

1. For the purposes of determining the
amount of assets to be maintained in accordance with this section, the
calculation of adjusted loss reserves and loss adjustment expense reserves,
adjusted unearned premium reserves and statutorily required policy and contract
reserves must be based on the amounts reported as of the most recent annual or
quarterly statement date.

2. Adjusted loss reserves and loss
adjustment expense reserves must be, for each individual line of business,
equal to the sum derived by multiplying the amount obtained pursuant to
paragraph (a) by the amount obtained pursuant to paragraph (b), and subtracting
from the product obtained by way of that multiplication the amount obtained
pursuant to paragraph (c), as follows:

(a) The result of each amount reported by the
insurer as losses and loss adjustment expenses unpaid for each accident year
for each individual line of business.

(b) The discount factor that is applicable to the
line of business and accident year published by the Internal Revenue Service in
accordance with the provisions of section 846 of the Internal Revenue Code, 26
U.S.C. § 846, as amended, for the calendar year that corresponds to the most
recent annual statement of the insurer.

(c) Accrued retrospective premiums discounted by
an average discount factor. The discount factor used in this paragraph must be
calculated by dividing the losses and loss adjustment expenses unpaid after
discounting by loss and loss adjustment expense reserves before discounting the
amount obtained pursuant to paragraph (a).

3. For purposes of the calculations
required pursuant to subsection 2, the losses and loss adjustment expenses
unpaid must be determined net of anticipated salvage and subrogation, and gross
of any discount for the time value of money or tabular discount.

4. Adjusted unearned premium reserves must
be equal to the sum derived by subtracting the amount obtained pursuant to
paragraph (b) from the amount obtained pursuant to paragraph (a), as follows:

(a) The amount reported by the insurer as
unearned premium reserves.

(b) The admitted asset amounts reported by the
insurer as:

(1) Premiums in and agent’s balances in
the course of collection, accident and health premiums due and unpaid and
uncollected premiums for accident and health premiums;

(2) Premiums, agent’s balances and
installments booked but deferred and not yet due; and

(3) Bills receivable, taken for premium.

5. Statutorily required policy and
contract reserves also must include, without limitation, any required
contingency reserves, including, without limitation, in the case of a mortgage
guaranty insurer, the amounts required by NRS
681B.100.

NRS 682A.506Required reporting of reserves.A
property and casualty, financial guaranty, mortgage guaranty or accident and
health insurer shall supplement its annual statement with a reconciliation and
summary of its assets and reserve requirements as required in NRS 682A.502 and 682A.504.
A reconciliation and summary showing that an insurer’s assets as required in NRS 682A.502 and 682A.504
are greater than or equal to its undiscounted reserves referred to in NRS 682A.502 and 682A.504
is sufficient to satisfy this requirement. Upon prior notification, the
Commissioner may require an insurer to submit such a reconciliation and summary
with any quarterly statement filed during the calendar year.

NRS 682A.508Notification to Commissioner of insufficient reserves.If a property and casualty, financial
guaranty, mortgage guaranty or accident and health insurer’s assets and
reserves do not comply with NRS 682A.502 and 682A.504, the insurer shall notify the Commissioner
immediately of the amount by which the reserve requirements exceed the annual
statement value of the qualifying assets, explain why the deficiency exists
and, within 30 days after the date of the notice, propose a plan of action to
remedy the deficiency.

1. If the Commissioner determines that an
insurer is not in compliance with NRS 682A.502 and
682A.504, the Commissioner shall require the
insurer to eliminate the condition causing the noncompliance within a specified
time after the date on which the notice of the Commissioner’s requirements is
mailed or delivered to the insurer.

2. If an insurer fails to comply with the
Commissioner’s requirements that are imposed pursuant to subsection 1, the
insurer is deemed to be in hazardous financial condition and the Commissioner
shall take one or more of the actions authorized by law as to insurers in
hazardous financial condition.

1. Except as otherwise specified in this
chapter, an insurer shall not acquire, directly or indirectly through an
investment subsidiary, an investment in accordance with the provisions of this
chapter if, as a result of and after giving effect to the investment, the
insurer would hold more than 5 percent of its admitted assets in investments of
all kinds issued, assumed, accepted, insured or guaranteed by a single person.

2. The limitation in subsection 1 does not
apply to the aggregate amounts insured by a single financial guaranty insurer
with the highest generic rating issued by a nationally recognized statistical
rating organization.

3. Asset-backed securities are not subject
to the limitation in subsection 1. However, an insurer shall not acquire an
asset-backed security if, as a result of and after giving effect to the
investment, the aggregate amount of asset-backed securities secured by, or
evidencing an interest in, a single asset or single pool of assets held by a
trust or other business entity held by the insurer would exceed 5 percent of
its admitted assets.

1. An insurer shall not acquire, directly
or indirectly through an investment subsidiary, an investment in accordance
with the provisions of NRS 682A.518, 682A.530 to 682A.538,
inclusive, or 682A.550 to 682A.558,
inclusive, or counterparty exposure in accordance with the provisions of NRS 682A.566 if, as a result of and after giving
effect to the investment:

(a) The aggregate amount of all medium and lower
grade investments held by the insurer would exceed 20 percent of its admitted
assets;

(b) The aggregate amount of lower grade
investments held by the insurer would exceed 10 percent of its admitted assets;

(c) The aggregate amount of investments rated 5 or
6 by the SVO held by the insurer would exceed 5 percent of its admitted assets;

(d) The aggregate amount of investments rated 6
by the SVO held by the insurer would exceed 1 percent of its admitted assets;
or

(e) The aggregate amount of medium and lower
grade investments held by the insurer that receive as cash income less than the
equivalent yield for United States Treasury issues with a comparative average
life, would exceed 1 percent of its admitted assets.

2. An insurer shall not acquire, directly
or indirectly through an investment subsidiary, an investment in accordance
with the provisions of NRS 682A.518, 682A.530 to 682A.538,
inclusive, or 682A.550 to 682A.558,
inclusive, or counterparty exposure in accordance with the provisions of NRS 682A.566 if, as a result of and after giving
effect to the investment:

(a) The aggregate amount of medium and lower
grade investments issued, assumed, guaranteed, accepted or insured by any one
person or, as to asset-backed securities by or evidencing an interest in a
single asset or pool of assets, held by the insurer, would exceed 1 percent of
its admitted assets; or

(b) The aggregate amount of lower grade
investments issued, assumed, guaranteed, accepted or insured by any one person
or, as to asset-backed securities by or evidencing an interest in a single
asset or pool of assets, held by the insurer, would exceed 0.5 percent of its
admitted assets.

3. If an insurer attains or exceeds the
limit of any one rating category referred to in this section, the insurer must
not be precluded from acquiring investments in other rating categories subject
to the specific and multicategory limits applicable to those investments.

1. An insurer shall not acquire, directly
or indirectly through an investment subsidiary, any Canadian investments
authorized by the provisions of this chapter if, as a result of and after
giving effect to the investment, the aggregate amount of these investments held
by the insurer would exceed 40 percent of its admitted assets, or if the
aggregate amount of Canadian investments not acquired in accordance with
paragraph (c) or (d) of subsection 1 of NRS 682A.518
held by the insurer would exceed 25 percent of its admitted assets.

2. As to an insurer that is authorized to
do business in Canada or that has outstanding insurance, annuity or reinsurance
contracts on lives or risks resident or located in Canada and denominated in
Canadian currency, the limitations in subsection 1 must be increased by the
greater of:

(a) The amount the insurer is required by
Canadian law to invest in Canada or to be denominated in Canadian currency; or

(b) One hundred twenty-five percent of the amount
of its reserves and other obligations under contracts on risks resident or
located in Canada.

1. Subject to the limitations of NRS 682A.514, but not to the limitations of NRS 682A.512, an insurer may acquire rated credit
instruments issued, assumed, guaranteed or insured by:

(a) The United States;

(b) A government-sponsored enterprise of the
United States, if the instruments of the government-sponsored enterprise are
assumed, guaranteed or insured by the United States or are otherwise backed or
supported by the full faith and credit of the United States;

(c) Canada; or

(d) A government-sponsored enterprise of Canada,
if the instruments of the government-sponsored enterprise are assumed,
guaranteed or insured by Canada or are otherwise backed or supported by the
full faith and credit of Canada.

2. An insurer shall not acquire an
instrument in accordance with paragraph (c) or (d) of subsection 1 if, as a
result of and after giving effect to the investment, the aggregate amount of
investments held by the insurer in accordance with paragraph (c) or (d) of
subsection 1 would exceed 40 percent of its admitted assets.

3. Subject to the limitations of NRS 682A.514, but not to the limitations of NRS 682A.512, an insurer may acquire rated credit
instruments, excluding asset-backed securities:

(a) Issued by a government money market mutual
fund, a class one money market mutual fund or a class one bond mutual fund;

(b) Issued, assumed, guaranteed or insured by a
government-sponsored enterprise of the United States other than those eligible
in accordance with subsection 1;

(c) Issued, assumed, guaranteed or insured by a
state, if the instruments are general obligations of the state; or

(d) Issued by a multilateral development bank.

4. An insurer shall not acquire an
instrument of any one fund, any one enterprise or entity, or any one state as
described in subsection 3 if, as a result of and after giving effect to the
investment, the aggregate amount of investments held in any one fund, enterprise
or entity or state would exceed 10 percent of the insurer’s admitted assets.

5. Subject to the limitations of NRS 682A.512, 682A.514
and 682A.516, an insurer may acquire preferred
stocks that are not foreign investments and which meet the requirements of
rated credit instruments if, as a result of and after giving effect to the
investments:

(a) The aggregate amount of preferred stocks held
by the insurer in accordance with this section does not exceed 20 percent of
the insurer’s admitted assets; and

(b) The aggregate amount of preferred stocks held
by the insurer in accordance with this section which are not sinking fund
stocks or rated P1 or P2 by the SVO does not exceed 10 percent of the insurer’s
admitted assets.

6. Subject to the limitations of NRS 682A.512, 682A.514
and 682A.516, in addition to those investments
eligible pursuant to subsections 1 to 5, inclusive, an insurer may acquire
rated credit instruments that are not foreign investments.

7. An insurer shall not acquire special
rated credit instruments as described in this section if, as a result of and
after giving effect to the investment, the aggregate amount of special rated
credit instruments held by the insurer would exceed 5 percent of the insurer’s
admitted assets.

1. An insurer may acquire investments in
investment pools that invest only in:

(a) Obligations that are rated 1 or 2 by the SVO
or have an equivalent of an SVO 1 or 2 rating, or, in the absence of a 1 or 2
rating or equivalent rating, the issuer has outstanding obligations with an SVO
1 or 2 equivalent rating, by a nationally recognized statistical rating
organization recognized by the SVO, and have:

(1) A remaining maturity of 397 days or
less or a put option that entitles the holder to receive the principal amount
of the obligation with the ability to exercise the put option through maturity
at specified intervals not exceeding 397 days; or

(2) A remaining maturity of less than or
equal to 3 years and a floating interest rate that resets not less frequently
than quarterly on the basis of a current short-term index and is not subject to
a maximum limit, if the obligations do not have an interest rate that varies
inversely to market interest rate changes. For the purpose of this
subparagraph, qualifying short-term indexes include, without limitation, the
federal funds rate, prime rate, treasury bills rates, the London Interbank
Offered Rate or commercial paper rates.

(c) Securities lending, repurchase and reverse
repurchase transactions that meet all the requirements of NRS 682A.548, except the quantitative limitations of
subsection 4 of that section.

(d) Investments which an insurer may acquire
pursuant to this chapter if the insurer’s proportionate interest in the amount
invested in these investments does not exceed the applicable limits of this
chapter.

2. For an investment in an investment pool
to be qualified pursuant to this chapter, the investment pool must not:

(a) Acquire securities issued, assumed,
guaranteed or insured by the insurer or an affiliate of the insurer;

(b) Borrow or incur any indebtedness for borrowed
money, except for securities lending and reverse repurchase transactions that
meet the requirements of NRS 682A.548 except the
quantitative limitations of subsection 4 of that section; or

(c) Permit the aggregate value of securities
loaned or sold to, purchased from or invested in any one business entity in
accordance with this section to exceed 10 percent of the total assets of the
investment pool.

3. The limitations of NRS 682A.512 do not apply to an insurer’s investment
in an investment pool, however an insurer shall not acquire an investment in an
investment pool in accordance with this section if, as a result of and after
giving effect to the investment, the aggregate amount of investments held by
the insurer in accordance with this section:

(a) In any one investment pool would exceed 10
percent of its admitted assets;

(b) In all investment pools investing in
investments permitted in accordance with paragraph (d) of subsection 1 would
exceed 25 percent of its admitted assets; or

(c) In all investment pools would exceed 40
percent of its admitted assets.

4. For an investment in an investment pool
to be qualified pursuant to this chapter, the manager of the investment pool
must:

(a) Be organized in accordance with the laws of
the United States or a state and designated as the pool manager in a pooling agreement;

(b) Be the insurer, an affiliated insurer or a
business entity affiliated with the insurer, a qualified bank, a business
entity registered in accordance with the provisions of the Investment Advisers
Act of 1940, 15 U.S.C. §§ 80a-1 et seq., as amended, or, in the case of a
United States branch of an alien insurer, its United States manager or
affiliates or subsidiaries of its United States manager;

(c) Compile and maintain detailed accounting
records setting forth:

(1) The cash receipts and disbursements
reflecting each participant’s proportionate investments in the investment pool;

(2) A complete description of all
underlying assets of the investment pool, including, without limitation,
amount, interest rate, maturity date, if any, and other appropriate
designations; and

(3) Other records which, on a daily basis,
allow third parties to verify each participant’s investment in the investment
pool; and

(d) Maintain the assets of the investment pool in
one or more accounts, in the name of or on behalf of the investment pool, in
accordance with a custody agreement with a qualified bank. The custody
agreement must:

(1) State and recognize the claims and
rights of each participant;

(2) Acknowledge that the underlying assets
of the investment pool are held solely for the benefit of each participant in
proportion to the aggregate amount of its investments in the investment pool;
and

(3) Contain an agreement that the
underlying assets of the investment pool must not be commingled with the
general assets of the custodian qualified bank or any other person.

5. The pooling agreement for each
investment pool must be in writing and must provide that:

(a) An insurer and its affiliated insurers or, in
the case of an investment pool investing solely in investments allowed in
accordance with paragraph (a) of subsection 1, the insurer and its
subsidiaries, affiliates or any pension or profit-sharing plan of the insurer,
its subsidiaries and affiliates or, in the case of a United States branch of an
alien insurer, affiliates or subsidiaries of its United States manager, shall
at all times hold 100 percent of the interests in the investment pool.

(b) The underlying assets of the investment pool
must not be commingled with the general assets of the pool manager or any other
person.

(c) In proportion to the aggregate amount of each
pool participant’s interest in the investment pool:

(1) Each participant owns an undivided
interest in the underlying assets of the investment pool; and

(2) The underlying assets of the
investment pool are held solely for the benefit of each participant.

(d) A participant, or in the event of the
participant’s insolvency, bankruptcy or receivership, its trustee, receiver or
other successor-in-interest, may withdraw all or any portion of its investment
from the investment pool in accordance with the terms of the pooling agreement.

(e) Withdrawals may be made on demand without
penalty or other assessment on any business day, but settlements of funds shall
occur within a reasonable and customary period thereafter not to exceed 5
business days. Distributions in accordance with this paragraph must be
calculated in each case net of all applicable fees and expenses of the
investment pool. The pooling agreement must provide that the pool manager shall
distribute to a participant at the discretion of the pool manager:

(1) In cash, the then fair market value of
the participant’s pro rata share of each underlying asset of the investment
pool;

(2) In kind, a pro rata share of each
underlying asset; or

(3) In a combination of cash and in-kind
distributions, a pro rata share in each underlying asset.

(f) The pool manager shall make the records of
the investment pool available for inspection by the Commissioner.

NRS 682A.522Acquisition of equity interests generally permissible.Subject to the limitations of NRS 682A.512, 682A.514
and 682A.516, an insurer may acquire equity interests
in business entities organized in accordance with the laws of any domestic
jurisdiction.

NRS 682A.524Limitation on aggregate amount of investments held in equity
interests.An insurer shall not
acquire an investment in accordance with the provisions of NRS 682A.522 to 682A.528,
inclusive, if, as a result of and after giving effect to the investment, the
aggregate amount of investments held by the insurer in accordance with the
provisions of those sections would exceed the greater of 25 percent of the
insurer’s admitted assets or 100 percent of the insurer’s surplus as regards
policyholders.

NRS 682A.526Restriction on mortgage or real estate holdings acquired or held
as equity interests.An insurer
shall not acquire in accordance with the provisions of NRS
682A.522 to 682A.528, inclusive, any
investments that the insurer may acquire in accordance with the provisions of NRS 682A.540 to 682A.546,
inclusive.

NRS 682A.528Short sale of equity investments.An
insurer shall not short sell equity investments unless the insurer covers the
short sale by owning the equity investment or an unrestricted right to the
equity instrument exercisable within 6 months after the short sale.

NRS 682A.530Tangible personal property under lease or other agreement.

1. Subject to the limitations of NRS 682A.512, 682A.514
and 682A.516, an insurer may acquire tangible
personal property or equity interests therein located or used wholly or in part
within a domestic jurisdiction either directly or indirectly through limited
partnership interests and general partnership interests not otherwise
prohibited by paragraph (d) of subsection 1 of NRS
682A.380, joint ventures, stock of an investment subsidiary or membership
interests in a limited-liability company, trust certificates or other similar
instruments.

2. Investments acquired as described in
subsection 1 are eligible only if:

(a) The property is subject to a lease or other
agreement with a person whose rated credit instruments in the amount of the
purchase price of the personal property the insurer could acquire in accordance
with the provisions of NRS 682A.518; and

(b) The lease or other agreement provides the
insurer the right to receive rental, purchase or other fixed payments for the
use or purchase of the property, and the aggregate value of the payments,
together with the estimated residual value of the property at the end of its
useful life and the estimated tax benefits to the insurer resulting from
ownership of the property, must be adequate to return the cost of the insurer’s
investment in the property, plus a return deemed adequate by the insurer.

NRS 682A.532Valuation of personal property under lease.The insurer shall compute the amount of each
investment entered into in accordance with the provisions of NRS 682A.530 to 682A.538,
inclusive, on the basis of the out-of-pocket purchase price and applicable
related expenses paid by the insurer for the investment, net of each borrowing
made to finance the purchase price and expenses, to the extent the borrowing is
without recourse to the insurer.

NRS 682A.534Limitation on aggregate amount of investments held in personal
property under lease.An insurer
shall not acquire an investment in accordance with the provisions of NRS 682A.530 to 682A.538,
inclusive, if, as a result of and after giving effect to the investment, the
aggregate amount of all investments held by the insurer in accordance with the
provisions of NRS 682A.530 to 682A.538, inclusive, would exceed:

1. Two percent of its admitted assets; or

2. One half of one percent of its admitted
assets as to any single item of tangible personal property.

NRS 682A.536Computation of investments held as personal property under lease
for purposes of investment diversification requirements.For the purposes of determining compliance
with the limitations of NRS 682A.512, 682A.514 and 682A.516,
investments acquired by an insurer in accordance with the provisions of NRS 682A.530 to 682A.538,
inclusive, must be aggregated with those acquired in accordance with the
provisions of NRS 682A.518, and each lessee of the
property in accordance with a lease referred to in NRS
682A.530 to 682A.538, inclusive, shall be
deemed the issuer of an obligation in the amount of the investment of the
insurer in the property determined as provided in NRS
682A.532.

NRS 682A.538Exempted personal property under lease.Nothing
in NRS 682A.530 to 682A.538,
inclusive, applies to tangible personal property lease arrangements between an
insurer and its subsidiaries and affiliates in accordance with a cost-sharing
arrangement or agreement permitted in accordance with the provisions of chapter 692C of NRS.

1. Subject to the limitations of NRS 682A.512, 682A.514
and 682A.516, an insurer may acquire, either
directly, or indirectly through limited partnership interests and general
partnership interests not otherwise prohibited by paragraph (d) of subsection 1
of NRS 682A.380, joint ventures, stock of an
investment subsidiary or membership interests in a limited-liability company,
trust certificates, or other similar instruments, obligations secured by mortgages
on real estate situated within a domestic jurisdiction. A mortgage loan which
is secured by other than a first lien must not be acquired unless the insurer
is the holder of the first lien.

2. The obligations held by the insurer and
any obligations with an equal lien priority must not, at the time of
acquisition of the obligation, exceed:

(a) Ninety percent of the fair market value of
the real estate, if the mortgage loan is secured by a purchase money mortgage
or like security received by the insurer upon disposition of the real estate.

(b) Eighty percent of the fair market value of
the real estate, if the mortgage loan requires immediate scheduled payment in
periodic installments of principal and interest, has an amortization period of
30 years or less and periodic payments made not less frequently than annually.
Each periodic payment must be sufficient to ensure that at all times the
outstanding principal balance of the mortgage loan is not greater than the
outstanding principal balance that would be outstanding under a mortgage loan
with the same original principal balance, the same interest rate and requiring
equal payments of principal and interest with the same frequency over the same
amortization period. Mortgage loans allowed in accordance with this section are
allowed notwithstanding the fact that they provide for a payment of the
principal balance before the end of the period of amortization of the loan. For
residential mortgage loans, the 80-percent limitation may be increased to 97 percent
if acceptable private mortgage insurance has been obtained.

(c) Seventy-five percent of the fair market value
of the real estate for mortgage loans that do not meet the requirements of
paragraph (a) or (b).

3. For the purposes of subsection 2, the amount
of an obligation required to be included in the calculation of the
loan-to-value ratio may be reduced to the extent the obligation is insured by
the Federal Housing Administration or guaranteed by the Administrator of
Veterans Affairs, or their successors.

4. A mortgage loan that is held by an
insurer pursuant to NRS 682A.325 or acquired in
accordance with the provisions of NRS 682A.540 to 682A.546, inclusive, and is restructured in a manner
that meets the requirements of a restructured mortgage loan in conformance with
the Accounting Practices and Procedures Manual adopted by the NAIC, will
continue to qualify as a mortgage loan in accordance with the provisions of
this chapter.

5. Subject to the limitations of NRS 682A.512, 682A.514
and 682A.516, credit lease transactions that do
not qualify for investment pursuant to NRS 682A.518
are exempt from the provisions of subsections 1, 2 and 3 if they meet the
following criteria:

(a) The loan amortizes over the initial fixed
lease term at least in an amount sufficient so that the loan balance at the end
of the lease term does not exceed the original appraised value of the real
estate;

(b) The lease payments cover or exceed the total
debt service over the life of the loan;

(c) A tenant or its affiliated entity whose rated
credit instruments have an SVO 1 or 2 rating or a comparable rating from a
nationally recognized statistical rating organization recognized by the SVO,
has a full faith and credit obligation to make the lease payments;

(d) The insurer holds or is the beneficial holder
of a first lien mortgage on the real estate;

(e) The expenses of the real estate are passed
through to the tenant excluding exterior, structural, parking and heating,
ventilation and air conditioning replacement expenses, unless annual escrow
contributions, from cash flows derived from the lease payments, cover the
expense shortfall; and

(f) There is a perfected assignment of the rents
due pursuant to the lease to, or for the benefit of, the insurer.

1. An insurer may acquire, manage and
dispose of real estate situated in a domestic jurisdiction either directly or
indirectly through limited partnership interests and general partnership
interests not otherwise prohibited by paragraph (d) of subsection 1 of NRS 682A.380, joint ventures, stock of an investment
subsidiary or membership interests in a limited-liability company, trust
certificates or other similar interests. The real estate must be income
producing or intended for improvement or development for investment purposes
under an existing program, in which case the real estate shall be deemed to be
income producing.

2. The real estate may be subject to
mortgages, liens or other encumbrances, the amount of which must, to the extent
that the obligations secured by the mortgages, liens or encumbrances are
without recourse to the insurer, be deducted from the amount of the investment
of the insurer in the real estate for purposes of determining compliance with
subsections 2 and 3 of NRS 682A.546.

1. An insurer may acquire, manage and
dispose of real estate for the convenient accommodation of the insurer’s, and
its affiliates, business operations, including home office, branch office and
filed office operations.

2. Real estate acquired as described in
this section may include excess space for rent to others, if the excess space,
valued at its fair market value, would otherwise be an allowed investment in
accordance with the provisions of NRS 682A.542 and
is so qualified by the insurer.

3. The real estate acquired as described
in this section may be subject to one or more mortgages, liens or other
encumbrances, the amount of which must, to the extent that the obligations
secured by the mortgages, liens or encumbrances are without recourse to the
insurer, be deducted from the amount of the investment of the insurer in the
real estate for purposes of determining compliance with subsection 4 of NRS 682A.546.

4. For purposes of this section, business
operations must not include that portion of real estate used for the direct
provision of health care services by an insurer whose insurance premiums and
required statutory reserves for accident and health insurance constitute at
least 95 percent of total premium considerations or total statutory required
reserves, respectively. An insurer may acquire real estate used for these
purposes under NRS 682A.542.

NRS 682A.546Limitation on aggregate amount of investments held in mortgage
loans and real estate.

1. An insurer shall not acquire an
investment in accordance with the provisions of NRS
682A.540 if, as a result of and after giving effect to the investment, the
aggregate amount of all investments held by the insurer pursuant to that
section would exceed:

(a) One percent of its admitted assets in
mortgage loans covering any one secured location;

(b) One-quarter of one percent of its admitted
assets in construction loans covering any one secured location; or

(c) One percent of its admitted assets in
construction loans in the aggregate.

2. An insurer shall not acquire an
investment under NRS 682A.542 if, as a result of
and after giving effect to the investment and any outstanding guarantees made
by the insurer in connection with the investment, the aggregate amount of
investments held by the insurer under NRS 682A.542
plus the guarantees outstanding would exceed:

(a) One percent of its admitted assets in any one
parcel or group of contiguous parcels of real estate, except that this
limitation does not apply to that portion of real estate used for the direct
provision of health care services by an insurer whose insurance premiums and
required statutory reserves for accident and health insurance constitute at
least 95 percent of total premium considerations or total statutory required
reserves, respectively, including, without limitation, hospitals, medical
clinics, medical professional buildings or other health facilities used for the
purpose of providing health services; or

(b) The lesser of 10 percent of its admitted
assets or 40 percent of its surplus as regards policyholders in the aggregate,
except for an insurer whose insurance premiums and required statutory reserves
for accident and health insurance constitute at least 95 percent of total
premium considerations or total statutory required reserves, respectively, this
limitation must be increased to 15 percent of its admitted assets in the
aggregate.

3. An insurer shall not acquire an
investment pursuant to NRS 682A.540 or 682A.542 if, as a result of and after giving effect
to the investment and any guarantees it has made in connection with the
investment, the aggregate amount of all investments held by the insurer in
accordance with the provisions of those sections plus the guarantees
outstanding would exceed 25 percent of the insurer’s admitted assets.

4. The limitations of NRS 682A.512, 682A.514
and 682A.516 do not apply to an insurer’s acquisition
of real estate under NRS 682A.544. An insurer
shall not acquire real estate under NRS 682A.544
if, as a result of and after giving effect to the acquisition, the aggregate
amount of real estate held by the insurer in accordance with that section would
exceed 10 percent of its admitted assets. With the permission of the
Commissioner, additional amounts of real estate may be acquired under NRS 682A.544.

1. The insurer’s board of directors shall
adopt a written plan that is consistent with the requirements of the written
plan in NRS 682A.365 which specifies the
guidelines and objectives to be followed, including, without limitation:

(a) A description of how cash received will be
invested or used for general corporate purposes of the insurer;

(b) Operational procedures to manage interest
rate risk, counterparty default risk, the conditions under which proceeds from
reverse repurchase transactions may be used in the ordinary course of business
and the use of acceptable collateral in a manner that reflects the liquidity
needs of the transaction; and

(c) The extent to which the insurer may engage in
these transactions.

2. The insurer shall enter into a written
agreement for all transactions authorized in this section other than dollar
roll transactions. The written agreement must require that each transaction terminate
not more than 1 year after its inception or upon the earlier demand of the
insurer. The agreement must be with the business entity counterparty, but for
securities lending transactions, the agreement may be with an agent acting on
behalf of the insurer, if the agent is a qualified business entity and if the
agreement:

(a) Requires the agent to enter into separate
agreements with each counterparty that are consistent with the requirements of
this section; and

(b) Prohibits securities lending transactions
under the agreement with the agent or its affiliates.

3. Cash received in a transaction entered
into as described in this section must be invested in accordance with the
provisions of this chapter and in a manner that recognizes the liquidity needs
of the transaction or used by the insurer for its general corporate purposes.
For so long as the transaction remains outstanding, the insurer, its agent or
custodian shall maintain, as to acceptable collateral received in a transaction
entered into in accordance with this section, either physically or through the
book entry systems of the Federal Reserve, the Depository Trust Company, the
Participants Trust Company or any other securities depositories approved by the
Commissioner:

(a) Possession of the acceptable collateral;

(b) A perfected security interest in the
acceptable collateral; or

(c) In the case of a jurisdiction outside of the
United States, title to, or rights of a secured creditor to, the acceptable
collateral.

4. The limitations of NRS 682A.512, 682A.514, 682A.516 and 682A.550 to
682A.558, inclusive, do not apply to the business
entity counterparty exposure created by transactions entered into under this
section. For purposes of calculations made to determine compliance with this
subsection, no effect will be given to the insurer’s future obligation to
resell securities, in the case of a repurchase transaction, or to repurchase
securities, in the case of a reverse repurchase transaction. An insurer shall
not enter into a transaction under this section if, as a result of and after
giving effect to the transaction:

(a) The aggregate amount of securities loaned,
sold to or purchased from any one business entity counterparty under this
section would exceed 5 percent of its admitted assets. In calculating the
amount sold to or purchased from a business entity counterparty under
repurchase or reverse repurchase transactions, effect may be given to netting
provisions contained within a master written agreement.

(b) The aggregate amount of all securities
loaned, sold to or purchased from all business entities under this section
would exceed 40 percent of its admitted assets.

Ê The
limitation in this subsection does not apply to reverse repurchase transactions
for so long as the borrowing is used to meet operational liquidity requirements
resulting from an officially declared catastrophe and subject to a plan
approved by the Commissioner.

5. In a securities lending transaction,
the insurer shall receive acceptable collateral having a market value on the
transaction date, equal to 102 percent or more of the market value of the
securities loaned by the insurer in the transaction on that date. If at any
time the market value of the acceptable collateral is less than the market
value of the loaned securities, the business entity counterparty is obligated
to deliver additional acceptable collateral, the market value of which,
together with the market value of all acceptable collateral held in connection
with the transaction, equals 102 percent or more of the market value of the
loaned securities.

6. In a reverse repurchase transaction,
other than a dollar roll transaction, the insurer shall receive acceptable
collateral having a market value on the transaction date equal to 95 percent or
more of the market value of the securities transferred by the insurer in the
transaction on that date. If at any time the market value of the acceptable
collateral is less than 95 percent of the market value of the securities so
transferred, the business entity counterparty is obligated to deliver
additional acceptable collateral, the market value of which, together with the
market value of all acceptable collateral held in connection with the
transaction, equals 95 percent or more of the market value of the transferred
securities.

7. In a dollar roll transaction, the
insurer shall receive cash in an amount equal to at least the market value of
the securities transferred by the insurer in the transaction on the transaction
date.

8. In a repurchase transaction, the
insurer shall receive as acceptable collateral transferred securities having a
market value equal to 102 percent or more of the purchase price paid by the
insurer for the securities. If at any time the market value of the acceptable
collateral is less than 100 percent of the purchase price paid by the insurer,
the business entity counterparty is obligated to provide additional acceptable
collateral, the market value of which, together with the market value of all
acceptable collateral held in connection with the transaction, equals 102
percent or more of the purchase price. Securities acquired by an insurer in a
repurchase transaction must not be sold in a reverse repurchase transaction,
loaned in a securities lending transaction or otherwise pledged.

9. To constitute acceptable collateral for
the purposes of this section, a letter of credit must have an expiration date
beyond the term of the subject transaction.

NRS 682A.550Foreign investments.Subject
to the limitations of NRS 682A.512, 682A.514 and 682A.516,
an insurer may acquire foreign investments, or engage in investment practices
with persons of, or in, foreign jurisdictions, of substantially the same types
as those that an insurer is allowed to acquire pursuant to this chapter, other
than of the type allowed under NRS 682A.520 if, as
a result of and after giving effect to the investment:

1. The aggregate amount of foreign
investments held by the insurer in accordance with this section does not exceed
20 percent of its admitted assets; and

2. The aggregate amount of foreign
investments held by the insurer in accordance with this section in a single
foreign jurisdiction does not exceed 10 percent of its admitted assets as to a
foreign jurisdiction that has a sovereign debt rating of SVO 1 or 5 percent of
its admitted assets as to any other foreign jurisdiction.

1. Subject to the limitations of NRS 682A.512, 682A.514
and 682A.516, an insurer may acquire investments,
or engage in investment practices denominated in foreign currencies, whether or
not they are foreign investments acquired as described in NRS 682A.550, or additional foreign currency exposure
as a result of the termination or expiration of a hedging transaction with
respect to investments denominated in a foreign currency if:

(a) The aggregate amount of investments held by
the insurer in accordance with this section denominated in foreign currencies
does not exceed 15 percent of its admitted assets; and

(b) The aggregate amount of investments held by
the insurer in accordance with this section denominated in the foreign currency
of a single foreign jurisdiction does not exceed 10 percent of its admitted
assets as to a foreign jurisdiction that has a sovereign debt rating of SVO 1
or 5 percent of its admitted assets as to any other foreign jurisdiction.

2. An investment must not be considered
denominated in a foreign currency if the acquiring insurer enters into one or
more contracts in transactions allowed under NRS
682A.560 to 682A.568, inclusive, and the
business entity counterparty agrees, in accordance with the contract or
contracts, to exchange all payments made on the foreign currency denominated
investment for United States currency at a rate which effectively insulates the
investment cash flows against future changes in currency exchange rates during
the period the contract or contracts are in effect.

NRS 682A.554Additional foreign investment and foreign currency allowance for
insurers authorized to do business in foreign jurisdiction and holding foreign
contracts.In addition to
investments allowed under NRS 682A.550 and 682A.552, an insurer that is authorized to do business
in a foreign jurisdiction, and that has outstanding insurance, annuity or
reinsurance contracts on lives or risks resident or located in that foreign
jurisdiction and denominated in foreign currency of that jurisdiction, may
acquire foreign investments respecting that foreign jurisdiction, and may
acquire investments denominated in the currency of that jurisdiction, subject
to the limitations of NRS 682A.512, 682A.514 and 682A.516.
Investments made in accordance with this section in obligations of foreign
governments, their political subdivisions and government-sponsored enterprises
are not subject to the limitations of NRS 682A.512,
682A.514 and 682A.516
if those investments carry an SVO rating of 1 or 2. The aggregate amount of
investments acquired by the insurer in accordance with this section must not
exceed the greater of:

1. The amount the insurer is required by
law to invest in the foreign jurisdiction; or

2. One hundred twenty-five percent of the
amount of the insurer’s reserves, net of reinsurance and other obligations
under the contracts.

NRS 682A.556Additional foreign investment and foreign currency allowance for
insurers not authorized to do business in foreign jurisdiction but holding
foreign contracts.In addition to
investments allowed under NRS 682A.550 and 682A.552, an insurer that is not authorized to do
business in a foreign jurisdiction but which has outstanding insurance, annuity
or reinsurance contracts on lives or risks resident or located in a foreign
jurisdiction and denominated in foreign currency of that jurisdiction, may acquire
foreign investments respecting that foreign jurisdiction, and may acquire
investments denominated in the currency of that jurisdiction subject to the
limitations set forth in NRS 682A.512, 682A.514 and 682A.516.
Investments made in accordance with this section in obligations of foreign
governments, their political subdivisions and government-sponsored enterprises
are not subject to the limitations of NRS 682A.512,
682A.514 and 682A.516
if those investments carry an SVO rating of 1 or 2. The aggregate amount of
investments acquired by the insurer in accordance with this section must not
exceed 105 percent of the amount of the insurer’s reserves, net of reinsurance,
and other obligations under the contracts on risks resident or located in the
foreign jurisdiction.

NRS 682A.558Calculation of foreign investments for purposes of determining
compliance with limitations.Investments
acquired in conformance with NRS 682A.550 to 682A.558, inclusive, must be aggregated with
investments of the same types made under this chapter, and in a similar manner,
for purposes of determining compliance with the limitations, if any, contained
in this chapter. Investments in obligations of foreign governments, their
political subdivisions and government-sponsored enterprises of these persons,
except for those exempted in accordance with the provisions of NRS 682A.554 and 682A.556,
are subject to the limitations of NRS 682A.512, 682A.514 and 682A.516.

NRS 682A.560Derivative transactions.An
insurer may, directly or indirectly through an investment subsidiary, engage in
derivative transactions as described in NRS 682A.560
to 682A.568, inclusive, pursuant to the following
conditions:

1. An insurer may use derivative
instruments under NRS 682A.560 to 682A.568, inclusive, to engage in hedging
transactions and certain income generation transactions, as these terms may be
further defined in regulations adopted by the Commissioner pursuant to NRS 682A.388; and

2. An insurer must be able to demonstrate
to the Commissioner the intended hedging characteristics and the ongoing
effectiveness of the derivative transaction or combination of transactions
through cash flow testing or other appropriate analyses.

NRS 682A.562Derivative transactions: Limitations on hedging transactions.An insurer may enter into hedging transactions
under NRS 682A.560 to 682A.568,
inclusive, if, as a result of and after giving effect to the transaction:

1. The aggregate statement value of
options, caps, floors and warrants not attached to another financial instrument
purchased and used in hedging transactions does not exceed 7.5 percent of its
admitted assets;

2. The aggregate statement value of
options, caps and floors written in hedging transactions does not exceed 3
percent of its admitted assets; and

3. The aggregate potential exposure of
collars, swaps, forwards and futures used in hedging transactions does not
exceed 6.5 percent of its admitted assets.

NRS 682A.564Derivative transactions: Limitations on income generation
transactions.An insurer may only
enter into the following types of income generation transactions if, as a
result of and after giving effect to the transactions, the aggregate statement
value of the fixed income assets that are subject to call plus the face value
of fixed income securities underlying a derivative instrument subject to call,
plus the amount of the purchase obligations under the puts, does not exceed 10
percent of its admitted assets:

1. Sales of covered call options on
noncallable fixed income securities, callable fixed income securities if the
option expires by its terms before the end of the noncallable period or
derivative instruments based on fixed income securities;

2. Sales of covered call options on equity
securities, if the insurer holds in its portfolio, or can immediately acquire
through the exercise of options, warrants or conversion rights already owned,
the equity securities subject to call during the complete term of the call
option sold; or

3. Sales of covered puts on investments
that the insurer is allowed to acquire pursuant to this chapter if the insurer
has escrowed, or entered into a custodian agreement segregating, cash or cash
equivalents with a market value equal to the amount of its purchase obligations
under the put during the complete term of the put option sold.

NRS 682A.568Commissioner may allow additional derivative transactions by
regulation; limitations.In
accordance with the regulations adopted pursuant to NRS
682A.388, the Commissioner may approve additional transactions involving
the use of derivative instruments in excess of the limits of NRS 682A.562 or for other risk-management purposes,
but replication transactions must not be allowed for other than risk-management
purposes.

NRS 682A.570Limited exemption from certain restrictions on investments.An insurer may acquire investments, or engage
in investment practices, in accordance with the provisions of this section and NRS 682A.572, of any kind that are not specifically
prohibited by this chapter, or engage in investment practices, without regard
to any limitation in NRS 682A.512 to 682A.558, inclusive, but an insurer shall not acquire
an investment or engage in an investment practice in accordance with the
provisions of this section and NRS 682A.572 if, as
a result of and after giving effect to the transaction, the aggregate amount of
the investments held by the insurer in accordance with the provisions of this
section and NRS 682A.572 would exceed the greater
of:

NRS 682A.572Quantitative limitation on exempted investments.An insurer shall not acquire any investment or
engage in any investment practice in accordance with subsection 2 of NRS 682A.570 if, as a result of and after giving
effect to the transaction, the aggregate amount of all investments in any one
person held by the insurer in accordance with subsection 1 of NRS 682A.570 would exceed 5 percent of its admitted
assets.